CHICAGO (November 2, 2017) — Severely lacking inventory levels across the country pinched sales growth and kept home prices rising at a steady clip in nearly all metro areas in the third quarter, according to the latest quarterly report by the National Association of Realtors®.
The national median existing single–family home price in the third quarter was $254,000, which is up 5.3 percent from the third quarter of 2016 ($241,300). The median price during the second quarter increased 6.1 percent from the second quarter of 2016.
Single–family home prices last quarter increased in 92 percent of measured markets, with 162 out of 177 metropolitan statistical areas1 (MSAs) showing sales price gains in the third quarter compared with the third quarter of 2016 (the most since the second quarter of 2015, at 93 percent). Fifteen areas (8 percent) recorded lower median prices from a year earlier.
Lawrence Yun, NAR chief economist, says the housing market's performance during the third quarter was underwhelming. “The stock market's climb to new record highs, the continued stretch of outstanding job growth and mortgage rates under 4 percent kept homebuyer demand at a very robust level throughout the summer,” he said. “Unfortunately, the pace of new listings were unable to replace what was quickly sold. Home shoppers had little to choose from, and many had out outbid others in order to close on a home. The end result was a slowdown in sales from earlier in the year, steadfast price growth and weakening affordability conditions.”
Added Yun, “While there was some moderation in price appreciation last quarter, home prices still far exceed incomes in several parts of the country – especially in the largest markets in the South and West where new home construction simply is not keeping up with job growth.”
Nineteen metro areas in the third quarter (11 percent) experienced double–digit increases, down from 23 areas in the second quarter (13 percent). Overall, there were more rising markets in the third quarter compared to the second quarter, when price gains were recorded in 87 percent of metro areas.
Total existing–home sales2, including single family and condos, slipped 3.1 percent to a seasonally adjusted annual rate of 5.39 million in the third quarter from 5.56 million in the second quarter, but are still 0.2 percent higher than the 5.38 million pace during the third quarter of 2016.
At the end of the third quarter, there were 1.90 million existing homes available for sale3, which was 6.4 percent below the 2.03 million homes for sale at the end of the third quarter in 2016. The average supply during the second quarter was 4.2 months – down from 4.6 months in the third quarter of last year.
Last quarter, the uptick in the national family median income ($71,775)4 did little to stave off continued weakness in affordability from the combination of higher mortgage rates and home prices compared to a year ago. To purchase a single–family home at the national median price, a buyer making a 5 percent down payment would need an income of $55,142, a 10 percent down payment would require an income of $52,240, and $46,435 would be needed for a 20 percent down payment.
“Affordability pressures are frustratingly occurring in places where jobs are plentiful and incomes are rising,” added Yun. “Without a significant boost in new and existing inventory to alleviate price growth, job creation could slow in high cost areas in upcoming years if residents begin exiling to more affordable parts of the country.”
The five most expensive housing markets in the third quarter were the San Jose, California metro area, where the median existing single–family price was $1,165,000; San Francisco, $900,000; Anaheim–Santa Ana, California, $790,000; urban Honolulu, $760,200; and San Diego, $607,000.
The five lowest–cost metro areas in the third quarter were Decatur, Illinois, $86,300; Youngstown–Warren–Boardman, Ohio, $88,900; Cumberland, Maryland, $96,400; Wichita Falls, Texas, $113,800; and Elmira, New York, $117,300.
Metro area condominium and cooperative prices – covering changes in 61 metro areas – showed the national median existing–condo price was $237,200 in the third quarter, up 5.4 percent from the third quarter of 2016 ($225,100). Ninety–three percent of metro areas showed gains in their median condo price from a year ago.
Total existing–home sales in the Northeast dropped 7.9 percent in the third quarter and are 0.5 percent below the third quarter of 2016. The median existing single–family home price in the Northeast was $283,800 in the third quarter, up 4.1 percent from a year ago.
In the Midwest, existing–home sales declined 3.3 percent in the third quarter and are 0.8 percent below a year ago. The median existing single–family home price in the Midwest increased 5.6 percent to $202,400 in the third quarter from the same quarter a year ago.
Existing–home sales in the South fell 4.4 percent in the third quarter but are 0.2 percent higher than the third quarter of 2016. The median existing single–family home price in the South was $226,100 in the third quarter, 5.5 percent above a year earlier.
In the West, existing–home sales increased 2.8 percent in the third quarter and are 1.9 percent above a year ago. The median existing single–family home price in the West increased 7.0 percent to $373,700 in the third quarter from the third quarter of 2016.
The National Association of Realtors®, “The Voice for Real Estate,” is America's largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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NOTE: NAR releases quarterly median single–family price data for approximately 175 Metropolitan Statistical Areas (MSAs). In some cases the MSA prices may not coincide with data released by state and local Realtor® associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors® are advised that for business purposes, local data from their association may be more relevant.
Data tables for MSA home prices (single family and condo) are posted at https://www.nar.realtor/research-and-statistics/housing-statistics/metro.... If insufficient data is reported for a MSA in particular quarter, it is listed as N/A. For areas not covered in the tables, please contact the local association of Realtors®.
1Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. NAR adheres to the OMB definitions, although in some areas an exact match is not possible from the available data. A list of counties included in MSA definitions is available at:
Regional median home prices are from a separate sampling that includes rural areas and portions of some smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter–to–quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.
Median price measurement reflects the types of homes that are selling during the quarter and can be skewed at times by changes in the sales mix. For example, changes in the level of distressed sales, which are heavily discounted, can vary notably in given markets and may affect percentage comparisons. Annual price measures generally smooth out any quarterly swings.
NAR began tracking of metropolitan area median single–family home prices in 1979; the metro area condo price series dates back to 1989.
Because there is a concentration of condos in high–cost metro areas, the national median condo price often is higher than the median single–family price. In a given market area, condos typically cost less than single–family homes. As the reporting sample expands in the future, additional areas will be included in the condo price report.
2The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co–operative housing.
3Total inventory and month's supply data are available back through 1999, while single–family inventory and month's supply are available back to 1982 (prior to 1999, single–family sales accounted for more than 90 percent of transactions and condos were measured only on a quarterly basis).
Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.
4Income figures are rounded to the nearest hundred, based on NAR modeling of Census data. Qualifying income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 3.9%.
NOTE: Existing–Home Sales for October will be released November 21, and the Pending Home Sales Index for October will be released November 29; release times are 10:00 a.m. ET.