Study: Home prices up in first quarter of 2020

Increase largely reflects pre-pandemic world


Home prices went up across the nation during the first quarter of 2020 including in the Valley and Peoria, according to a recent report by the National Association of Realtors®.

However, this statistic isn’t necessarily a good measure of the climate created by the onset of the COVID-19 pandemic, which came to the forefront halfway through the quarter, experts say.

There will likely be less home sales in the second quarter.

Median single-family home prices increased year-over-year in 96% of measured markets in the first quarter, with 174 of 181 metropolitan statistical areas showing sales price gains. That is an increase from the 94% share seen in the fourth quarter of 2019.

The national median existing single-family home price in the first quarter of 2020 was $274,600, up 7.7% from the first quarter of 2019, when the median price was $254,900.

The Phoenix metro area is above the national level in the first quarter of 2020 with the median home price of $308,900, up 11.8% from the first quarter of 2019 when the median price was $276,400, according to the NAR study.

Benjamin J Katz, owner/designated broker for Lake Pleasant Real Estate, said such is the case in Peoria and the Northwest Valley.

However, he noted that first quarter numbers are from homes that went under contract in December of last year, as well as January and February of this year.

“So that is really before the coronavirus got serious and lockdowns took place,” Mr. Katz said. “Second quarter numbers will most likely show less number of sales but not a decrease in value. While there are currently less people looking and writing contracts, there are also less sellers deciding to put their home on the market. There is still very limited inventory in most markets so prices really won’t go down until there is more supply than demand, or more sellers than buyers.”

Forty-six metros, mostly in the West and South regions, saw prices increase by double-digits.

“The first quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of the housing demand prior to the pandemic,” NAR Chief Economist Lawrence Yun said in a news release. “Even now, due to very limited listings, home prices are showing no signs of buckling.”

In March, the median sales price of existing homes rose 8% on a year-over-year basis. Mr. Yun said the strong desire for housing, paired with the dire inventory totals contributed to higher home prices.

“Supply is extremely limited, and there are simply not as many homes for sale to meet the demand among potential buyers,” he said. “More supply and more listings are needed to provide a faster recovery for the economy.”

At the end of last quarter, 1.50 million existing homes throughout the country were available for sale, 10.2% lower than total inventory at the end of 2019’s first quarter. As of March 2020, housing inventory totals were equivalent to 3.4 months at the current sales pace.

Lower mortgage rates made home purchases more affordable in both 2019 and in the first quarter of 2020. The 30-year fixed-rate averaged 3.57% in the first quarter of 2020, down from 4.62% one year ago. The average monthly mortgage payment on a 30-year fixed-rate mortgage with a 20% down payment was $995, down from $1,048 a year ago. This is equivalent to 15% of the median family income of $79,662, down from 16.1% one year ago.

Housing expenses are considered a cost burden if the cost is more than 30% of income.

To afford a typical mortgage payment, a given family needs to spend no more than 25% of income on its mortgage payment (for a 30-year fixed-rate mortgage with a 20% down payment).

The income that is needed for this scenario decreased to $47,760, down from $50,304 one year ago. 

In 135 of the 181 metro areas, a family needed less than $50,000 to afford a home in the first quarter of 2020, assuming a 20% down payment. However, in the most expensive metro areas, a given family needed over $100,000 to afford a home. This was the case in San-Jose-Sunnyvale-Santa Clara, Calif. ($235,179); San Francisco, Calif. ($171,593); Anaheim, Calif. ($152,431); Urban Honolulu, Hawaii ($137,414); San Diego, Calif. ($116,718); Boulder, Colo. ($108,461) and Los Angeles, Calif. ($103,270).

Philip Haldiman can be reached at 623-876-3697,, or on Twitter @philiphaldiman.