Home prices surge as low mortgage rates attract buyers

Buyers are rushing into the housing market to take advantage of falling borrowing costs. Now, they're facing rising prices.

The median price of an existing single-family home gained 6.6% in the fourth quarter, hitting $274,900, according to the National Association of Realtors. That was the biggest year-over-year gain in nearly three years. By comparison, the annual gain in the third quarter was 5.1%.

Buyers are jumping into the housing market to take advantage of low rates after a spike in borrowing costs in late 2018 caused a slowdown.

Prices are jumping in high-profile markets as well as cities that have been considered more affordable. Trenton, N.J., values increased 18.2%, while they climbed 14% in Boise, Idaho, and 11% in Albuquerque, N.M.

While most expensive cities had increases, prices in San Jose, Calif., which faces an affordability crisis, fell 0.3% to $1.25 million. Elsewhere in California, prices climbed 3.9% in San Francisco, 4.6% in San Diego and 7.2% in Los Angeles. On Long Island, Nassau County saw prices rise 3.7%.

Bloomberg News