Property prices in metro areas in the US continue their upward trend
Image An uptick in sales activity amidst meagre supply levels upheld the trend of unwavering property price gains in an overwhelming majority of metro areas in the United States during the first quarter of 2016.
It means that the median existing single family home price increased in 87% of markets with 154 out of 178 metropolitan statistical areas showing gains based on closed sales in the first quarter of the year compared with the same quarter of 2015, according to the latest data from the National Association of Realtors.
Some 24 areas or 13% recorded lower median prices from a year earlier but there were more rising markets in the first quarter compared to the fourth quarter of 2015, when price gains were recorded in 81% of metro areas.
The data also shows that 28 metro areas or 16% experienced double digit increases in the first quarter of the year, a slight decrease from the 30 metro areas in the fourth quarter of 2015 while 51 metro areas or 28% experienced double digit increases in the first quarter of last year.
Lawrence Yun, NAR chief economist, pointed out that home prices chugged along at a robust pace in most metro areas during the first three months of 2016. ‘The solid run of sustained job creation and attractive mortgage rates below 4% spurred steady demand for home purchases in many local markets,’ he said.
‘Unfortunately, sales were somewhat subdued by supply and demand imbalances and broadly rising prices above wage growth. As a result, the path to home ownership so far this year remains strenuous for a segment of prospective buyers in the most competitive areas,’ he added.
The national median existing single family home price in the first quarter was $217,600, up 6.3% from the first quarter of 2015 and the median price during the fourth quarter of 2015 increased 6.7% from the fourth quarter of 2014.
According to propertywire, “Total existing home sales, including single family and condos, rose 1.7% to a seasonally adjusted annual rate of 5.29 million in the first quarter from 5.2 million in the fourth quarter of 2015 and are 4.8% higher than the 5.05 million pace during the first quarter of 2015.”
‘In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing sales since 2007,’ Yun explained.
‘The demand for buying is there, but unless the stock of new and existing homes for sale increases significantly especially in several markets in the West, the housing market will struggle to reach its full potential,’ he pointed out.
At the end of the first quarter, there were 1.98 million existing homes available for sale, which was below the 2.01 million homes for sale at the end of the first quarter in 2015. The average supply during the first quarter was 4.3 months, down from 4.6 months a year ago.
‘Current home owners in many metro areas, especially those who purchased a home immediately after the downturn, have enjoyed a sizeable boost in housing equity and household wealth in recent years,’ said Yun. ‘At a time of stagnant wage growth and mounting rent increases, the same cannot be said for renters. Their inability to reach the market because of affordability and supply restrictions is contributing to rising wealth inequality in the US,’ he added.
According to NAR president Tom Salomone, in the top job producing metro areas real estate agents are reporting a steady stream of interested buyers either in the early stages of the home search or currently ready to make a purchase.
The data also shows that total existing home sales in the Northeast decreased 4.1% in the first quarter but are 11.2% above the first quarter of 2015. The median existing single family home price in the Northeast was $249,400 in the first quarter, up 1.8% from a year ago.
In the Midwest, existing home sales were unchanged in the first quarter compared to the fourth quarter but are 6.1% higher than a year ago. The median existing single family home price in the Midwest increased 7.3% to $167,900 in the first quarter from the same quarter a year ago.
Existing home sales in the South rose 5.2% in the first quarter and are 3.6% higher than the first quarter of 2015. The median existing single family home price in the South was $192,100 in the first quarter, some 5.8% above a year earlier.
In the West, existing home sales climbed 0.9% in the first quarter and are 2.1% above a year ago. The median existing single family home price in the West increased 7.1% to $315,900 in the first quarter from the first quarter of 2015.