The Washington region was among the large majority of metropolitan-area markets in the nation that saw year-over-year home-price growth in the fourth quarter of 2022. But like many of those areas, the D.C. region also posted lower prices at the end of the year than it had some months before.
With a median sales price of $550,000, the Washington region posted a year-over-year increase of 2.4 percent from $537,400, according to new figures reported by the National Association of Realtors (NAR). Figures represent single-family home sales.
The D.C. region was among approximately nine out of 10 of the 186 metro markets surveyed by the trade group to see increasing sales prices. Compared to a year ago, the national median single-family existing-home price in the fourth quarter rose 4 percent to $378,700.
But a combination of spiking interest rates, affordability challenges and a return of seasonal ebb-and-flow in the marketplace meant the October-November-December quarter saw lower prices from earlier in the year, when the market had remained hot.
In the D.C. region, prices peaked in the second quarter at $626,700 before trailing off as the market cooled.
“A slowdown in home prices is under way and welcomed, particularly as the typical home price has risen 42 percent in the past three years,” NAR chief economist Lawrence Yun said, noting growth has far surpassed wage increases and consumer inflation of 15 percent and 14 percent, respectively, since 2019. “Far fewer metro markets experienced double-digit price gains in the latest quarter.”
Among the major U.S. regions, the South saw the largest share of single-family existing-home sales (45%) in the third quarter, with year-over-year price appreciation of 4.9 percent. Prices grew 5.3 percent in the Northeast, 4 percent in the Midwest and 2.6 percent in the West (which remained by far the priciest of the four).
The 10 metro areas with the largest year-over-year price increases all recorded gains of at least 14.5 percent, with seven of those markets in Florida and the Carolinas. Those include Farmington, N.M. (20.3%); North Port-Sarasota-Bradenton, Fla. (19.5%); Naples-Immokalee-Marco Island, Fla. (17.2%); Greensboro-High Point, N.C. (17%); Myrtle Beach-Conway-North Myrtle Beach, S.C.-N.C. (16.2%); Oshkosh-Neenah, Wisc. (16%); Winston-Salem, N.C. (15.7%); El Paso, Texas (15.2%); Punta Gorda, Fla. (15.2%); and Deltona-Daytona Beach-Ormond Beach, Fla. (14.5%).
Half of the top 10 most expensive markets in the U.S. were in California, including San Jose-Sunnyvale-Santa Clara, Calif. ($1,577,500; down 5.8%); San Francisco-Oakland-Hayward, Calif. ($1,230,000; -6.1%); Anaheim-Santa Ana-Irvine, Calif. ($1,132,000; -1.6%); Urban Honolulu, Hawaii ($1,090,200; +3.4%); San Diego-Carlsbad, Calif. ($857,000; +1.4%); Los Angeles-Long Beach-Glendale, Calif. ($829,100; -1.3%); Naples-Immokalee-Marco Island, Fla. ($802,500; +17.2%); Boulder, Colo. ($759,500; -2%); Seattle-Tacoma-Bellevue, Wash. ($708,900; +1.3%); and Barnstable Town, Mass. ($668,100; +4%).
Among other Virginia metro areas, the median sales price of $365,000 for the fourth quarter in Richmond was up 5.2 percent from a year before, while the median of $305,400 in the Hampton Roads area was up 7.2 percent.
Where is the market headed as 2023 chugs along?
“Even with a projected reduction in home sales this year, prices are expected to remain stable in the vast majority of the markets due to extremely limited supply,” Yun said. “Moreover, there are signs that buyers are returning as mortgage rates decline, even with inventory levels near historic lows.”
“A few markets may see double-digit price drops, especially some of the more expensive parts of the country, which have also seen weaker employment and higher instances of residents moving to other areas,” he said.
First-time buyers looking to purchase a typical home during the fourth quarter of 2022 encountered affordability challenges. For a typical starter home valued at $321,900 with a 10-percent down payment loan, the monthly mortgage payment rose to $1,931, about 7 percent more than the previous quarter ($1,806) and an increase of almost $700, or 57 percent, from a year before.
First-time buyers typically spent 39.5 percent of their family income on mortgage payments, up from 37.8 percent in the previous quarter. A mortgage is considered unaffordable if the monthly payment (principal and interest) amounts to more than 25 percent of the family’s income.
A family needed a qualifying income of at least $100,000 to afford a 10-percent down payment mortgage in 71 markets, up from 59 in the prior quarter. Yet, a family needed a qualifying income of less than $50,000 to afford a home in 16 markets, down from 17 in the previous quarter.
