Dive Brief:

• Housing inventory shortages continued to push home prices up in the third quarter, with seven of the 10 priciest U.S. residential markets located in the West, according to the National Association of Realtors. The most expensive market for the period was San Jose, CA, where the median single-family home price was $1 million.

• The median single-family home price increased in 87% of markets during the period from a year ago, while prices dropped in 12% of markets for the period.

• Low mortgage rates and job growth are encouraging demand for housing, but tight inventory is driving prices up, particularly in the South and West, according to NAR Chief Economist Lawrence Yun. 

Dive Insight:

Following San Jose as the priciest housing markets in the third quarter based on median existing single-family home prices were: San Francisco ($835,400); Honolulu ($735,300); Anaheim-Sana Ana, CA ($740,100); and San Diego ($589, 300).

On the other end of the spectrum, the least-expensive metros during the period were primarily located in the Midwest. They were: Youngstown-Warren-Boardman, OH ($90,300); Cumberland, MD ($94,400); Decatur, IL ($99,400); Elmira, NY ($109,400); and Rockford, IL ($111,900).

The strong variation between the East and West Coasts, with the Midwest also trending more affordable, follows other recent industry reports revealing the impact of tight inventory and population shifts on home prices in parts of the country — primarily the West Coast. In an October report from Coldwell Banker evaluating more than 2,000 U.S. real estate markets, the first 11 entries were located in California, while markets in the Midwest and former-industrial East Coast filled out the bottom of the list.

High home prices aren’t the only factor impacting home sales. Personal finance website SmartAsset recently ranked the "most livable" U.S. cities based on six factors: walkability, violent crime, property crime, unemployment, population and income after housing. The rankings put Jersey City, NJ, at the top of the list because residents there have easy access to Manhattan but incur lower housing costs.

Realtor.com did a similar study last month, evaluating the country’s top 100 metropolitan areas based on how competitive the market there was for homeownership to determine where potential buyers could get a deal. Factoring out markets with unemployment rates in the bottom 20% overall, it turned out El Paso, TX, as the "most overlooked" market, followed by Albany, NY; Virginia Beach, VA; Winston-Salem, NC; and Augusta, GA.