Home prices in the first quarter of the year were up in nearly all major U.S. cities, and despite the continuing difficulties of the COVID-19 pandemic, prices show no signs of slowing, according to the National Association of REALTORS®’ latest quarterly report.

The median price nationwide for an existing single-family home was $274,600 in the first quarter, a 7.7% increase year over year. “The first-quarter price jumps mostly reflect conditions prior to the coronavirus outbreak and show the strength of housing demand prior to the pandemic,” says NAR Chief Economist Lawrence Yun. “Even now, due to very limited listings, home prices are showing no signs of buckling.”

The median sales price in March, when the pandemic was ramping up rapidly in the U.S., reflected an increase of 8% year over year, NAR reports. Strong housing demand and low inventory is prompting home prices to rise, Yun says. “Supply is extremely limited, and there are simply not as many homes for sale to meet the demand among potential buyers,” he adds. “More supply and more listings are needed to provide a faster recovery for the economy.” Inventory in the first quarter was down 10.2% from the previous quarter. In March, inventory was at a mere 3.4-month supply.

Priciest Places

Forty-six metros—mostly in the West and South—posted double-digit price increases during the first quarter. Some of the metros that saw the largest upticks were Boise City, Idaho (up 18.1%); Eugene, Ore. (14.5%); and Colorado Springs, Colo. (14.4%). And the country's most expensive markets saw even higher prices in the same time period:

• San Jose, Calif.: prices rose 10.7% year over year to a median $1.35 million


• San Francisco: rose 5.9% to $985,000


• Anaheim, Calif.: rose 9.4% to $875,000


• San Diego: rose 8.1% to $670,000


• Boulder, Colo.: rose 3.1% to $622,600


• Los Angeles: rose 8.1% to $592,800


• Seattle: rose 11.5% to $554,400

“The fast-rising home prices are not healthy, so more homebuilding needs to take place as the economy begins to reopen,” Yun says. “Mortgage rates are at historic lows, and those with secure employment will be attracted to the market.”

Affordability Improves

Indeed, lower mortgage rates are helping to offset higher home prices, a trend that helped make purchases more affordable in 2019 and the first quarter of 2020, NAR notes. The 30-year fixed-rate mortgage averaged 3.57% in the first three months of this year, down from 4.62% a year ago. Mortgage rates recently reached all-time lows.

The average monthly mortgage payment for a 30-year fixed-rate loan with a 20% down payment was $995 in the first quarter. That’s down from $1,048 a year ago and costs about 15% of the median family income of $79,662, NAR reports.