Rising home prices and growing affordability concerns showed no signs of abating in the second quarter, as San Jose, Calif. became the first city where the price of a typical home eclipses $1 million.
Home prices rose in 83% of metropolitan areas across the U.S. in the second quarter compared with a year earlier, according to data released Wednesday by the National Association of Realtors. That is a slight decline from the first quarter, when price increases were reported in 87% of metro areas.
Still, there were some signs the market is starting to cool, bringing welcome relief for home buyers. Twenty-five out of the 178 metropolitan areas included in the report experienced double-digit price gains, down significantly from the same period last year, when34 metro areas saw double-digit gains.
Twenty-nine metros also experienced price declines this quarter, according to NAR.
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Nonetheless, home prices hit record highs during the quarter, driven by rapidly rising prices in California and northwestern cities, such as Portland and Seattle. The national median home price was $240,700, according to NAR, up nearly 5% from the previous peak in the second quarter of 2015. Falling mortgage rates and modest income gains failed to improve housing affordability for average families. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $52,255. During the same quarter last year, such a buyer would needed to make just over $49,000.
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"Many listings in a majority of markets—and especially those in lower price ranges—had multiple offers and went under contract quickly because of severely inadequate supply," said Lawrence Yun, chief economist at NAR. "This in turn dented affordability and without a doubt priced out a segment of buyers attempting to seek relief from fast-growing rents."
San Jose was the most expensive market in the country, with a median home price of $1.085 million, followed by San Francisco at $885,600 and Anaheim-Santa Ana, Calif., at $742,200.
News Corp., owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.