Home price gains rise at a healthier pace

Home prices rose at healthy pace in the third quarter, helping to fuel the best period for the housing market in nearly a decade. 

Sales of existing homes have picked up pace even amid inventory shortages, pushing up prices more slowly, according to the July-September quarterly report by the National Association of Realtors (NAR).

{mosads}”The demand for buying picked up speed in many metro areas during the summer as more households entered the market, encouraged by favorable mortgage rates and improving local economies,” said Lawrence Yun, NAR chief economist.

“While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales,” he said.

The median price of an existing single-family home increased in 87 percent of markets, down from 93 percent in the April-June quarter.

Twenty-four areas, 13 percent, recorded lower median prices from a year earlier, the report said. 

Overall, 21 metro areas, 12 percent, experienced double-digit increases in the third quarter, a decline from the 34 in the second quarter. 

The national median price for existing single-family homes in the third quarter was $229,000, up 5.5 percent from the third quarter of 2014.

That is a slower pace than the second quarter increase of 8.2 percent from a year earlier.

Meanwhile, total existing-home sales, including single family and condo, increased 3.4 percent, to a seasonally adjusted annual rate of 5.48 million in the third quarter, up from 5.3 million in the second quarter.

Sales are 8.3 percent higher than the 5.06 million pace during the third quarter of 2014.

Yun said that sales had the potential to be even higher last quarter given the decline in mortgage rates and improving economic conditions.

“Unfortunately, the lack of any meaningful gains in housing supply pushed prices in some areas above what some potential buyers — especially first-time buyers — are able to afford,” he said. 

The five most expensive housing markets in the third quarter were the San Jose, Calif. where the median price was $965,000; San Francisco, $809,400; Anaheim-Santa Ana, Calif., $715,300; Honolulu, $714,000; and San Diego, $554,400.

The five lowest-cost metro areas in the third quarter were Cumberland, Md., at $82,400; Youngstown-Warren-Boardman, Ohio, $90,700; Decatur, Ill., $101,400; Rockford, Ill., $102,800; and Elmira, N.Y., $108,800.

“Many of the metro areas with the fastest price appreciation over the past year were in the South, particularly in Florida,” Yun said.

“A combination of solid job gains, above average shares of vacation and foreign buyers and little new construction being added was behind these areas’ faster price growth,” he said.

At the end of the third quarter, there were 2.21 million existing homes available for sale, below the 2.28 million homes for sale at the end of the same period last year.

The average supply during the third quarter was 4.9 months, down from 5.5 months a year ago.

“Realtors are still reporting that many homes are going under contract more quickly than what’s typical this time of year,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark.

“While this is certainly beneficial to homeowners looking to sell, some are still reluctant to list out of concerns they’ll have limited time and choices during their own home search,” Polychron said.

Regionally, all four regions saw increases in existing-home sales during the quarter. Sales rose 6.4 percent in the Northeast, 2.1 percent in the Midwest, 3 percent in the South and 3.9 percent in the West.