The first quarter of this year brought little relief to homebuyers looking for more affordable properties because US real estate prices went up by 15.7%. Furthermore, 70% of the 185 metros registered double-digit hikes, up from the previous quarter. And when it comes to regional increases, Florida metros accounted for half of the top ten.
No sign of price rises moderating
The latest report from the National Association of Realtors (NAR) finds that US real estate prices show no inclination to stop their upward trend. On the contrary, in Q1, the median sales price for single-family homes rose by 15.7%, bringing the average value to US$368,200.
The quarterly rate was higher than Q4 last year, when prices went up by 14.3%. In addition, more metros saw double-digit gains than in the previous quarter. The NAR found that 70% of the 185 metropolitan areas in the index experienced price gains of over 10%, compared to 66% in Q4 last year.
Florida prices go up the most
Florida metros dominated the country’s highest price hikes, and the Sunshine State occupied half the positions in the top ten. At the top of the table was Punta Gorda, where house prices soared by 34.4% in the first three months of this year.
Ocala came a close second with a 33.8% rise, with Lakeland-Winter Haven in fourth position (30.1%). The other Florida metros in the rankings were Tampa, where properties went up by 28.8% (the sixth highest in the country) and North Point-Bradenton-Sarasota (up 28%).
Both Tampa and Sarasota have already been earmarked as the hottest markets in the US this year. Sarasota topped Redfin’s metros for the busiest market in 2022, while PWC highlighted Tampa as a “magnet market” and the fifth-best for investment in the US this year.
Higher prices in smaller metros
The latest NAR statistics point to a shift in preferred market dynamics, with US real estate prices in smaller metros outpacing those in other larger markets. “Traditionally, homes in these markets were viewed as relatively inexpensive,” said Yun, “but with recent migration trends, prices have increased significantly.”
NAR attributes the change to buyers looking for more affordable housing. It is also due to more working from home opportunities that give employees the flexibility of relocating to smaller metro areas.
Most expensive properties in the US
California dominates this listing with half of the top ten metros. Topping the table is San Jose-Sunnyvale in California, where the median sales price for a single-family home comes in at US$1,875,000. This average price includes the 25% increase in Q1 this year.
San Francisco-Oakland and Anaheim-Santa Ana-Irvine take second and third places, respectively, although their median house prices are some distance from San Jose-Sunnyvale. Properties in San Francisco cost an average US$1.38 million, while those in Anaheim cost US$1.26 million.
US real estate prices for the rest of 2022
The latest price hikes have led would-be buyers to wonder whether the trend is here to stay for the rest of the year.
“Prices throughout the country have surged for two years,” said Lawrence Yun, Chief Economist at NAR. He cautioned that price decreases are unlikely but pointed out that “appreciation should slow in the coming months”.
Yun bases his prediction on a forecast of more supply in the near future – inventory levels dropped still further in Q1 to a record low. However, he also anticipates a slight brake on demand as mortgage rates continue to rise.