Homeowners gain nearly $150K in equity over five years amid stable market conditions

Damian Eales Chief Executive Officer | realtors.com

Homeowners in the United States have experienced significant gains in housing wealth over the past five years, according to a recent report from the National Association of Realtors® (NAR). Lawrence Yun, Chief Economist at NAR, stated that "a typical homeowner accumulated $147,000 in housing wealth in the last five years." This equates to an annual profit of approximately $29,400.

Despite concerns about rapid price appreciation potentially leading to a market crash, Yun indicated that such an event is unlikely. "Distressed property sales and the number of people defaulting on mortgage payments are both at historic lows," he said.

In the third quarter of 2024, around 90% of metropolitan areas saw home price increases. Single-family existing-home sales prices rose in 87% of metro areas measured by NAR. The national median single-family existing-home price increased by 3.1% from a year ago to $418,700.

The South accounted for 45.1% of all single-family existing-home sales during July through September. However, the Northeast led in terms of price growth with a 7.8% increase year-over-year.

Illinois saw significant home price increases, with four out of ten metros experiencing double-digit gains being located there. Racine, WI topped the list with a median list price increase of 13.7%.

Meanwhile, California dominated as one of the most expensive markets in the U.S., with eight out of ten priciest metros located there.

Housing affordability has shown slight improvement as mortgage rates decreased slightly during this period. Monthly mortgage payments on typical homes fell by 2.4%, and families spent less on mortgages relative to their income compared to previous periods.

Yun commented on these developments: "Housing affordability has been a challenge, but the worst appears to be over." He also noted that rising wages are now outpacing home price increases and predicted stabilization in mortgage rates below last year's levels.

First-time buyers found some relief as well; their monthly mortgage payments decreased by 5.5% compared to the prior quarter for starter homes valued at $355,900 with a 10% down payment loan.