According to the National Association of Realtors’ second quarter report, median home prices continued improving, with annual price gains showing their strongest reading in more than seven years. Compared to the second quarter of last year, 87 percent of metropolitan areas studied showed gains, and 31 percent posted double-digit gains.
Eight markets were added to the report in the latest quarter. In the second quarter of last year, 75 percent of all available areas showed price gains from a year earlier, and only 14 percent of markets rose by double-digit amounts.
The trade group cites market challenges like rising mortgage interest rates and buyers being impacted by rising prices, but asserts that most buyers remain “well positioned to afford a home in their area.”
Lawrence Yun, NAR’s chief economist, said tight inventory is continuing to drive home prices.
“There continue to be more buyers than sellers, and that is placing pressure on home prices, with multiple bids common in some areas of the country.” he said. “Higher interest rates are now causing sales to level out, but the tight supply conditions look to be with us for the balance of the year in most of the country. Areas with tighter supplies generally are seeing the strongest price growth, including markets such as Sacramento, Atlanta, Las Vegas, Naples, San Francisco and Los Angeles.”
Median Home Price Hits $203,500
Nationally, the median existing single-family home price rose 12.2 percent in one year to $203,500, marking the strongest year-over-year increase since the fourth quarter of 2005, when it surged 13.6 percent. NAR reports that “a shrinking market share of lower priced homes accounts for some of the price growth,” with distressed sales accounting for only 17 percent of sales in the second quarter, down from 26 percent a year ago.
“In areas where foreclosed inventory still looms because distressed properties are mired in a slow process, lender and market uncertainty are holding back price growth,” Yun said. “This includes areas such as New York City; Hartford, Conn.; and some markets in New Jersey.”
At the end of the second quarter, the 2.19 million existing homes available for sale represented a 7.6 percent annual drop in inventory, with the average supply dipping to 5.1 months, down from 6.4 months last year at this time.
“Supplies in the low five-month range can be expected for the foreseeable future,” Yun said. “Steady increases in new home construction will help to relieve shortage conditions going into 2014, which would moderate price growth.”
Regional Performance Varied
In the Midwest, existing-home sales rose 2.3 percent in the second quarter and are 14.6 percent higher than a year ago. The median existing single-family home price in the Midwest increased 7.9 percent to $160,600 in the second quarter from the same quarter last year.
Existing-home sales in the South increased 3.2 percent in the second quarter and are 15.1 percent above the second quarter of 2012. The median existing single-family home price in the South was $180,700 in the second quarter, up 11.0 percent from a year earlier.
In the West, existing-home sales rose 2.5 percent in the second quarter and are 7.4 percent above a year ago. With limited inventory, the median existing single-family home price in the West surged 18.2 percent to $277,500 in the second quarter from the second quarter of 2012.
Existing-home sales in the Northeast were unchanged in the second quarter but are 9.1 percent above the second quarter of 2012. The median existing single-family home price in the Northeast was $257,900 in the second quarter, up 6.9 percent to from a year ago.
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