Home prices in over half of US markets saw record price increases in the 2nd quarter

• Home prices in over half of the US saw record price increases last quarter.
• Median home prices rose 8.5% in the second quarter to $402,600, per NAR data.

Home prices saw a record increase in over half of the US housing market over the past quarter, deepening the increasingly unaffordable conditions homebuyers are facing.

The price for a median single-family home saw an increase in 53.8% of metropolitan housing markets in the US last quarter, the National Association of Realtors said in a statement on Monday. Median home prices rose 8.5% overall to $402,600 over the second quarter, though prices are down 2.4% compared to prior year.

Fond du Lac, Wisconsin, saw the largest home-price increase, with prices leaping 25.3% higher compared to the prior year. That was followed by New Bern, North Carolina with a 19.7% year-per-year price increase, and Duluth, Minnesota-Wisconsin with a 14.6% increase. Davenport Moline-Rock Island, Iowa-Illinois prices jumped 12.6%, while Allentown-Bethlehem-Easton Pennsylvania-New Jersey prices surged 11.7%.

Housing affordability has been weighed down over the past year due to high mortgage rates, with the average rate on the 30-year fixed mortgage rising to 6.96% over the past week, according to Freddie Mac data.

That's raised the cost of borrowing for buyers and discouraged sellers from listing their properties for sale, worsening a supply-demand imbalance that's pushed up prices. The share of homes worth $1 million or more is nearing an all-time-high, and the median home price is now around 44% higher than prior to the pandemic, Redfin data shows.

NAR chief economist Lawrence Yun previously told Insider he expected home prices to see little change through the rest of the year as mortgage rates stick close to a 20-year-high. But stagnant prices could be good news for buyers, as household incomes rise an average 4%-5% each year.

That could give those searching for a home some time to "catch up" with the costs of housing, Yun said, though it could take years to close the affordability gap as mortgage rates remain elevated.

Other experts have said affordability is unlikely to improve until mortgage rates fall closer to 5%. The 30-year mortgage rate is expected to ease to around 6% by the end of 2023, according to estimates from NAR and Redfin.