U.S. housing was less affordable in the third quarter than in the previous quarter, with the composite homebuyer index dropping from 151.9 to 150.8, and the first-time buyer index dropping from 100.1 to 99.2, according to data released this week by the National Association of Realtors. A value of 100 means that a family with the national median income has exactly enough income to qualify for a mortgage on a median-priced home—values lower or higher indicate a family with the national median income has less or more money than the amount needed.
The last five quarters have seen the largest upsurge in home prices in the U.S. since data has been available; they have risen more than 25%. Strong homebuyer demand and limited housing supply have continued to push median sales prices for existing single-family homes higher. The median single-family home sales price rose in 99% of 183 measured market areas in the third quarter, according to the NAR data, with 78% of these areas showing double-digit price gains.
While the rate of sales price increases slowed down in the third quarter, prices continue to climb. The median sales price of a single-family existing home rose to $363,700, a 16% increase from a year ago. The Northeast led the growth in prices with a 17.5% over prior year, followed by the South at 14.9%, the Midwest at 10.7% and the West at 10.3%.
In September, the median time on market remained at 17 days, according to NAR data, consistent with previous months and the lowest on record. The average number of offers received per home was 3.7 that month, a decrease from the April peak of 5.1 offers per home. This indicates some moderation in the number of competing offers as some buyers-to-be get priced out of the market.
The strong demand for housing and limited inventory have put upward pressure on pricing. Price increases are expected to moderate as more inventory comes into the market and once interest rates rise; however, affordability will continue to be an issue, particularly for first-time home buyers.