Most Metro Areas Show Strong Annual Home-Price Growth

The majority of metropolitan areas in the third quarter experienced robust year-over-year price gains, with the national median price showing the strongest annual growth in nearly eight years, according to the latest quarterly report by the National Association of Realtors®.

The median existing single-family home price increased in 88 percent of measured markets, with 144 out of 163 metropolitan statistical areas1 (MSAs) showing gains based on closings in the third quarter compared with the third quarter of 2012. Fifty-four areas, 33 percent, had double-digit increases, while 19 had price declines.

In the second quarter, price gains were recorded in 87 percent of metro areas from a year earlier, while in the third quarter of last year, 81 percent of available areas showed annual increases, but only 18 percent of markets rose by double-digit amounts.

Lawrence Yun, NAR chief economist, said market momentum is changing. “Rising prices and higher interest rates have taken a bite out of housing affordability,” he said. “However, we have the ongoing situation of more buyers than sellers in the market, so lower sales will help to take the pressure off home price growth and allow them to rise slowly at a single-digit growth rate in 2014.”

Even with the erosion in affordability, a companion breakout in this report on income requirements to buy a median-priced home on a metro area basis shows most buyers can afford a home, but less so in pricier areas.

The five most expensive housing markets were the San Jose, Calif., metro area, where the median existing single-family price was $805,000; San Francisco, $705,000; Honolulu, $679,800; Anaheim-Santa Ana, Calif., $670,700; and San Diego, where the median price was $485,000.

The five most affordable metro areas were Toledo, Ohio, with a median single-family price of $87,500; Rockford, Ill., at $88,900; Decatur, Ill., $91,000; Ocala Fla., $103,600; and Topeka, Kan., with a median price of $106,900.

The national median existing single-family home price was $207,300 in the third quarter, up 12.5 percent from $184,300 in the second third of 2012, which is the strongest year-over-year increase since the fourth quarter of 2005 when it jumped 13.6 percent. In the second quarter the median price rose 12.2 percent from a year earlier.

The median price is where half of the homes sold for more and half sold for less. A smaller market share of lower priced homes accounts for some of the price growth. Distressed homes2 – foreclosures and short sales generally sold at discount – accounted for 14 percent of third quarter sales, down from 24 percent a year ago.

At the end of the third quarter there were 2.21 million existing homes available for sale, modestly higher than the third quarter of 2012, when 2.17 million homes were on the market. However, with higher sales, the average supply during the quarter was 5.0 months, down from 5.9 months in the third quarter of 2012.

Total existing-home sales,3 including single-family and condo, rose 5.9 percent to a seasonally adjusted annual rate of 5.36 million in the third quarter from 5.06 million in the second quarter, and were 13.0 percent above the 4.74 million level during the third quarter of 2012. Sales were at the highest pace since the first quarter of 2007, when they reached 5.66 million.

According to Freddie Mac, the national commitment rate on a 30-year conventional fixed-rate mortgage averaged 4.44 percent in the third quarter, up from 3.69 percent in the second quarter and 3.54 percent in the third quarter of 2012; the commitment rate is at the highest level since the second quarter of 2011 when it averaged 4.66 percent.

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said continued access to safe, affordable financing is critical. “NAR firmly believes that hardworking, creditworthy consumers should be able to achieve their dreams of owning a home,” he said. “As legislators and regulators consider reforms to the secondary mortgage market, they must ensure that mortgage capital is available under all economic conditions so that qualified homebuyers

Total existing-home sales in the Northeast jumped 10.5 percent in the third quarter, and are 15.9 percent above the third of 2012. The median existing single-family home price in the Northeast was $256,800 in the third quarter, up 4.5 percent to from a year ago.



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