WASHINGTON (May 9, 2016) — An uptick in sales activity amidst meager supply levels upheld the trend of unwavering price gains in an overwhelming majority of metro areas during the first quarter of the year, according to the latest quarterly report by the National Association of Realtors®.
The median existing single-family home price increased in 87 percent of measured markets, with 154 out of 178 metropolitan statistical areas1 (MSAs) showing gains based on closed sales in the first quarter compared with the first quarter of 2015. Twenty-four areas (13 percent) recorded lower median prices from a year earlier.
There were more rising markets in the first quarter compared to the fourth quarter of 2015, when price gains were recorded in 81 percent of metro areas. Twenty-eight metro areas in the first quarter (16 percent) experienced double-digit increases – a slight decrease from the 30 metro areas in the fourth quarter of 2015; fifty-one metro areas (28 percent) experienced double-digit increases in the first quarter of last year.
Lawrence Yun, NAR chief economist, says 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 percent 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 homeownership so far this year remains strenuous for a segment of prospective buyers in the most competitive areas."
The national median existing single-family home price in the first quarter was $217,600, up 6.3 percent from the first quarter of 2015 ($204,700). The median price during the fourth quarter of 2015 increased 6.7 percent from the fourth quarter of 2014.
Total existing-home sales2, including single family and condo, rose 1.7 percent to a seasonally adjusted annual rate of 5.29 million in the first quarter from 5.20 million in the fourth quarter of 2015, and are 4.8 percent 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 (5.66 million)," adds Yun. "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."
At the end of the first quarter, there were 1.98 million existing homes available for sale3, 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.
Despite a small increase in the national family median income ($68,431)4, climbing home prices and slightly higher mortgage rates caused affordability to decline in the first quarter compared to the first quarter of last year. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $47,819, a 10 percent down payment would require an income of $45,302, and $40,268 would be needed for a 20 percent down payment.
"Current homeowners 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," adds 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 U.S."
The five most expensive housing markets in the first quarter were the San Jose, Calif., metro area, where the median existing single-family price was $970,000; San Francisco, $770,300; Honolulu, $721,400; Anaheim-Santa Ana, Calif., $713,700; and San Diego, $554,300.
The five lowest-cost metro areas in the first quarter were Cumberland, Md., $67,400; Youngstown-Warren-Boardman, Ohio, $77,500; Decatur, Ill., $83,300; Wichita Falls, Texas, $95,200, and Rockford, Ill., $95,800.
Metro area condominium and cooperative prices – covering changes in 60 metro areas – showed the national median existing-condo price was $204,700 in the first quarter, up 5.8 percent from the first quarter of 2015 ($193,500). Forty-four metro areas (73 percent) showed gains in their median condo price from a year ago; 16 areas had declines.
NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida, says buyer foot traffic has been strong throughout the spring. "Especially in the top job producing metro areas, Realtors® are reporting a steady stream of interested buyers either in the early stages of the home search or currently ready to make a purchase," he said. "Buyers will need to remain in close communication with a Realtor® this spring and be prepared to act fast when a home in their price range comes along. Without much newly constructed housing stock coming onto the market, existing-homes competitively priced in many areas are going under contract very quickly."
Total existing-home sales in the Northeast decreased 4.1 percent in the first quarter but are 11.2 percent 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 percent 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 percent higher than a year ago. The median existing single-family home price in the Midwest increased 7.3 percent to $167,900 in the first quarter from the same quarter a year ago.
Existing-home sales in the South rose 5.2 percent in the first quarter and are 3.6 percent higher than the first quarter of 2015. The median existing single-family home price in the South was $192,100 in the first quarter, 5.8 percent above a year earlier.
In the West, existing-home sales climbed 0.9 percent in the first quarter and are 2.1 percent above a year ago. The median existing single-family home price in the West increased 7.1 percent to $315,900 in the first quarter from the first quarter of 2015.
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing over 1.1 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 170 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/topics/metropolitan-median-area-prices-and-affordability. 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®.
1 Areas 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: http://www.census.gov/population/estimates/metro-city/List4.txt.
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.
2 The 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.
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.
3 Total 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).
4 Income 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 4.0%.
NOTE: Existing-Home Sales for April will be released May 20, and the Pending Home Sales Index for April will be released May 26; release times are 10:00 a.m. ET.