SANTA CLARA, CA — According to Realtor.com® May housing data, median list prices have surged 37.5% since May 2019, while available inventory has decreased by 34.2%. This dynamic positions the market strongly in favor of sellers.
A Closer Look at Price Per Square Foot
The median price of homes for sale this May saw a modest rise, growing from $441,000 last year to $442,500 this year, a slight increase of 0.3%. However, examining the median price per square foot reveals a more significant increase of 3.8%. This suggests that while overall median prices have remained stable, the value of homes on a per-square-foot basis has continued to climb.
The difference between the changes in median listing price and price per square foot indicates an influx of smaller, more affordable homes, which helps keep the median price steady even as per-square-foot costs rise. Since pre-pandemic levels, many metros have experienced staggering increases in median price per square foot. Notably, New York saw an 84.7% rise, Boston 72.9%, and Nashville 68.6%.
Metros with Highest Increase in Median List Price-Per-Sq. Ft. Compared to May 2019
- New York-Newark-Jersey City, N.Y.-N.J.-Pa.: 84.7%
- Boston-Cambridge-Newton, Mass.-N.H.: 72.9%
- Nashville-Davidson-Murfreesboro-Franklin, Tenn.: 68.6%
- Tampa-St. Petersburg-Clearwater, Fla.: 68.0%
- San Diego-Chula Vista-Carlsbad, Calif.: 65.7%
- Austin-Round Rock-Georgetown, Texas: 64.7%
- Memphis, Tenn.-Miss.-Ark.: 64.2%
- Riverside-San Bernardino-Ontario, Calif.: 62.7%
- Washington-Arlington-Alexandria, DC-Va.-Md.-W. Va.: 61.3%
- Hartford-East Hartford-Middletown, Conn.: 57.7%
Rising Income Requirements
Increases in median price per square foot can benefit sellers, as the value of homes on the market today is significantly higher than pre-pandemic levels. However, this trend poses challenges for buyers. Many could find themselves priced out if their household income hasn’t grown at a similar or faster rate, especially when considering higher mortgage rates. This May, the typical monthly mortgage payment for the median home increased by approximately $158 compared to last year. Consequently, the required household income to purchase a median-priced home rose by $6,400, reaching $119,700, factoring in taxes and insurance costs.
Inventory Rises with More Affordable Homes Entering the Market
For the seventh consecutive month, the number of homes actively for sale has risen, with May 2024 seeing a 35.2% increase in active listings compared to the same time last year. Significant gains were observed in Tampa (87.4%), Phoenix (80.3%), and Orlando (78.0%).
A detailed look into the types of homes entering the market reveals a 46.6% increase in homes priced between $200,000 and $350,000 year-over-year, surpassing April’s high of 41.0%. This influx of affordable homes is promising news for prospective buyers.
The current housing market dynamics demonstrate a complex interplay of rising prices, increasing inventory, and shifting buyer capabilities. While sellers stand to gain from higher property values, buyers face the challenge of navigating higher costs amid fluctuating economic conditions.
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