It represents the first time the $2 million threshold was crossed since the realtors association began tracking housing prices in 1979, according to a press release accompanying the report.
California is home to seven of the 10 most expensive metropolitan markets in the country. The San Francisco Bay Area, which includes Silicon Valley, ranked second nationwide with homes approaching an average of $1.45 million.
Every metropolitan market in California saw prices increase, with the Irvine, Santa Ana, and Anaheim region in Orange County experiencing the largest gains of about 15 percent—with homes averaging about $1.438 million and coming in at third highest in the U.S.
Bakersfield ranked as the most affordable area in the Golden State—with an average of about $384,000 for home prices. Fellow Central Valley markets, including Fresno and Chico, ranked second and third respectively, with prices averaging $425,000 and nearly $439,000, respectively.
Nationwide, 199 of 223 markets saw price increases, with Racine, Wisconsin and Glen Falls, New York leading the way tied with 19.8 percent spikes. Prices in the two cities, however, are significantly below California averages at slightly more than $309,000 and $270,000 respectively.
Honolulu, Hawaii, Boulder, Colorado, and the Naples Area in Florida were the fourth, ninth, and 10th most expensive nationwide. Honolulu was the only non-California market to average more than $1 million.
“The record-high home prices in most metro markets bring good and bad news,” Lawrence Yun, chief economist for the realtors association, said in the press release. “It’s terrific news for homeowners who are moving ahead in wealth gains. However, it’s difficult for those wanting to buy a home as the required income to qualify has roughly doubled from just a few years ago.”
Across the country, 13 percent of markets experienced double-digit price hikes—representing a slowing from the 30 percent that saw similar gains in the first quarter.
The national median for single-family existing home prices increased nearly 5 percent to more than $422,000, according to the press release.
Slightly less than 10 percent of markets saw price declines for the quarter, up from about 7 percent earlier this year.
Region-wide, housing prices grew by 9.8 percent in the Northeast, 5.5 percent in the Midwest, 5.4 percent in the West, and about 2.3 percent in the South, where the largest share—about 45.5 percent—of home sales occurred.
To afford a home in the most expensive region in California, prospective buyers must earn between $521,000 and $619,000 per year, depending on the amount of down payment.
Affordability worsened across the country, as well, as the average mortgage payment rose to nearly $2,300—up 11 percent from the first quarter. Limited inventory and rising prices are to blame, in part, for the lack of affordability, according to the realtors association.
Families need incomes of more than $100,000 per year to afford a home in 48 percent of markets—a jump from 40.7 percent in the first quarter.
Relief is expected later this year, however, as interest rates have retreated from around 7.5 percent to approximately 6.5 percent, and more homes are expected to hit the market, according to economists.
“Housing affordability will improve in upcoming months,” Yun said. “Mortgage rates have fallen measurably, and more supply is reaching the market. Therefore, the income required to buy a home will decrease.”
One realtor agreed that lower interest rates will improve mortgage costs but could cause home prices to further increase.
Home prices rose 9 percent since the second quarter of 2023, averaging more than $906,000 statewide, according to the California Association of Realtors Aug. 12 housing affordability report.
The report found that only 14 percent of Californians could afford the average mortgage payment of more than $5,600—calculated with 20 percent down payment and a 7.1 percent interest rate.
An income of more than $236,000 is needed to afford an average home in California—representing a nearly 321 percent increase compared to 2012, when a family could afford an average priced home with an income of slightly more than $56,000, according to the California realtors association report.