Despite a slight dip in mortgage payments, high home values continue to challenge buyers
Home prices continued to climb across most US metro areas in the fourth quarter of 2024, with nearly 90% of markets reporting gains, according to the latest report from the National Association of REALTORS® (NAR).
Despite a cooling real estate market in some regions, housing costs remained on the rise as mortgage rates fluctuated between 6.12% and 6.85% during the period.
A total of 201 out of 226 metro markets (89%) saw home price appreciation in Q4, up from 87% in the previous quarter. Fourteen per cent (14%) of those markets posted double-digit price gains, nearly doubling the 7% recorded in Q3.
"Record-high home prices and the accompanying housing wealth gains are definitely good news for property owners," said NAR chief economist Lawrence Yun. "However, renters who are looking to transition into homeownership face significant hurdles."
The national median price for a single-family home rose 4.8% year-over-year to $410,100, up from a 3.2% annual gain in the third quarter. Over the past five years, home prices have surged nearly 50%.
Fastest-rising metro areas
The top 10 metro areas with the sharpest price gains all saw at least a 14.9% increase, with six of them located in the Midwest. The highest price growth was in:
- Jackson, Miss. – 28.7%
- Peoria, Ill. – 19.6%
- Chattanooga, Tenn.-Ga. – 18.2%
- Elmira, N.Y. – 17.6%
- Fond du Lac, Wis. – 17.6%
- Cleveland-Elyria, Ohio – 16.4%
- Bismarck, N.D. – 15.8%
- Akron, Ohio – 15.5%
- Blacksburg-Christiansburg, Va. – 15.0%
- Canton-Massillon, Ohio – 14.9%
Read next: What will happen to Fannie Mae and Freddie Mac under Trump?
Most expensive housing markets
California continued to dominate the list of the country’s most expensive metro areas, with eight of the top 10 most costly markets.
- San Jose-Sunnyvale-Santa Clara, Calif. – $1.92 million (+9.7%)
- Anaheim-Santa Ana-Irvine, Calif. – $1.36 million (+4.7%)
- San Francisco-Oakland-Hayward, Calif. – $1.315 million (+5.2%)
- Urban Honolulu, Hawaii – $1.103 million (+3.2%)
- San Diego-Carlsbad, Calif. – $985,000 (+5.7%)
Only two markets in the top 10 saw price declines: Salinas, Calif. (-5.0%) and Boulder, Colo. (-1.0%).
Hurricane impact
While the majority of metro areas saw price growth, 24 markets recorded price declines in Q4. Seven of those areas were in regions impacted by hurricanes.
"Prices in those markets are likely to recover quickly as home sales return to normal," said Holden Lewis, home and mortgage expert at NerdWallet. "The strongest home price gains could be found in inland markets that aren't as vulnerable to hurricanes and wildfires."
Housing affordability showed slight improvement in Q4, despite ongoing affordability challenges.
The monthly mortgage payment for a typical single-family home (20% down payment) fell to $2,124, down 0.8% from Q3. First-time buyers purchasing a starter home valued at $348,600 with a 10% down payment saw their monthly mortgage cost drop to $2,083, a 0.9% decrease from the previous quarter.
Read next: Down Payment on a House: Tips to Determine the Right Amount
Families typically spent 24.8% of their income on mortgage payments, down from 26.5% a year ago. Despite minor affordability improvements, homeownership remains out of reach for many. In 43.8% of markets, a family needed a minimum income of $100,000 to afford a 10% down mortgage.
As mortgage rates fluctuate and economic uncertainty continues, affordability remains a concern. Yun suggested that relocating to more affordable regions could be an option for those struggling with high prices.
"While recognizing many workers may not have the option to relocate, those who can or are willing to move may find more affordable conditions, especially given the wide variance in home prices nationwide," he said in the report.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
