12 Nov 2014

Home Prices Rise Steadily in Third Quarter

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home-prices-riseThe U.S. median home price rose to $217,300 in the third quarter of 2014 as home prices continued their slow, steady rise in most U.S. metropolitan areas, the NATIONAL ASSOCIATION OF REALTORS® says.

That price is 4.9% higher than the median price NAR reported in the third quarter of 2013. The median price is where half the homes sell for more and half sell for less.

That’s a healthy price increase, says NAR Chief Economist Lawrence Yun. “Home-price gains returned to more normalized levels of low- to mid-single digit rate of appreciation in many metro markets as inventory levels steadily increased,” he said. “Moreover, there are a good number of local markets that are still remarkably affordable with median prices at or under $200,000.”

Most Home Markets Rising

The median existing single-family home price increased in 125 out of 172 metropolitan areas (73%). But the rate at which prices are rising in those metros has slowed. At this point last year, 54 metros recorded double-digit home price increases. In the third quarter of this year, only 16 metro areas recorded double-digit home price increases.

That’s good news for first-time homebuyers who struggle to save downpayments, pass stringent lending tests, and earn enough income to purchase a home.

NAR President Steve Brown says traditional buyers are now entering a more favorable market. “With inventory levels at a rate closer to supporting overall demand, bidding wars are occurring less — giving buyers more time to view homes and secure financing,” he said.

Compared to earlier in the year, many markets have fewer cash-rich investors bidding to buy homes, which reduces competition for entry-level homebuyers.

5 most expensive housing markets:
1.  San Jose, Calif.: $860,000
2.  San Francisco: $744,400
3.  Anaheim-Santa Ana, Calif.: $697,000
4.  Honolulu: $677,600
5.  San Diego: $517,800

5 lowest-cost housing markets:
1.  Youngstown-Warren-Boardman, Ohio: $84,500
2.  Cumberland, Md.: $93,200
3.  Rockford, Ill.: $98,100
4.  Decatur, Ill.: $101,900
5.  Toledo, Ohio: $107,000

Distressed Sales Down

The third quarter data also held good news for existing homeowners: Foreclosures and short sales are down. Distressed homeowners typically sell at a discount, which drives down the value of surrounding properties.

Only 9% of third quarter sales were foreclosures or short sales (where the owners sold for less than they owed on their mortgage). That’s down from 14% a year ago. “Distressed sales are becoming less prevalent in many parts of the country and will likely be in the low single-digits percentagewise at this time next year,” said Yun.

Little Change in Home Affordability

Slightly lower mortgage rates and an uptick in the national family median income ($65,562) kept affordability in the third quarter roughly in line with the second quarter.

How Much Income Do You Need to Buy the Median Single-Family Home?

Existing-Home Price by Region

Condo and Co-op Prices

Nationally, the median existing condo/co-op price rose to $211,000 in the third quarter, up 2.7% from the third quarter of 2013 ($205,500). Condo and co-op prices rose in 41 metro areas (67%) and fell in 20 metros, NAR says.

Home Prices Rise Steadily in Third Quarter
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