The median home price hit $2 million in one metro area

For the first time ever, a major U.S. metro area has a median existing home sale price over $2 million, according to second quarter data from the National Association of Realtors.

At the same time, five other cities have median prices over $1 million, up from a total of four for the first quarter.

These record high home prices are both good news and bad news, NAR Chief Economist Lawrence Yun said.

"It's terrific news for homeowners who are moving ahead in wealth gains," Yun commented in a press release. "However, it's difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago."

Approximately 89% of the housing markets it collected data on, 199 out of 223, recorded price gains during the second quarter. Double-digit annual percentage gains took place in 13%, but that was down from 30% in the first quarter.

Nationwide, prices increased 4.9% year-over-year, to a median of $422,100 from $402,500 for the second quarter of 2023. In the first quarter, values were up 5% on an annual basis to $389,200.

Meanwhile, 22 of the markets reported price declines in the second quarter, almost 10%, versus 7% for the first quarter.

"Fast-gaining markets took a breather in the past quarter, including Nashville, Durham, Austin, and several Florida metro areas," Yun said. "Conversely, some markets that experienced declines last year have roared back, such as San Francisco, Anaheim, and New York."

In fact, San Francisco had the second highest median price in the quarter, at $1.449 million, up 8.5% from the previous year.

No. 1 was its neighbor, San Jose, California, at $2.008 million, up 11.6% year-over-year.

Of the six markets with a median over $1 million, the only one not in California was Honolulu, at $1.101 million. California accounts for seven of the top 10, but while prices also grew by double digit percentages in Anaheim, San Diego and Salinas, in San Luis Obispo, the gain was a scant 0.5%.

Cape Coral-Fort Myers, Florida, had the largest annual price drop, down 5.5%.

With prices rising in so many markets, affordability also decreased. The monthly mortgage payment for a typical single-family home where the buyer made a 20% down payment was $2,262. That was up 11.1% from the first quarter, when it was $2,036, and by 10.3% from $2,050 one year ago.

Families typically spent 26.5% of their income on their mortgage payment, compared with 24.2% in the previous quarter and 25.3% for the same period last year.

However, shifts in the housing market in recent weeks should help ease the financial burdens for potential buyers.

For example, the 30-year fixed rate mortgage averaged 6.47% last week, a decline of over one-quarter of a percentage point, according to Freddie Mac.

"Housing affordability will improve in upcoming months," Yun said. "Mortgage rates have fallen measurably, and more supply is reaching the market. Therefore, the income required to buy a home will decrease."