Stronger demand combined with lagging inventory levels caused home prices in the US to accelerate in many metro areas during the first quarter of 2015, new data shows.
And the number of areas experiencing double digit price appreciation doubled compared to last quarter of 2014, according to the latest quarterly report by the National Association of Realtors.
The median existing single family home price increased in 85% of measured markets, with 148 out of 174 metropolitan statistical areas (MSAs) showing gains based on closings in the first quarter compared with the first quarter of 2014.
However, 25 or 14% recorded lower median prices from a year earlier but the number of rising markets in the first quarter was mostly unchanged compared to the fourth quarter of last year, when price increases were recorded in 85% of metro areas.
Then data also shows that 51 metro areas or 29% experienced double digit increases in the first quarter of the year, a sharp increase from the 24 metro areas in the fourth quarter of 2014 and above the 37 that experienced double digit increases in the first quarter of 2014.
According to Lawrence Yun, NAR chief economist, after moderating to healthier levels of growth at the end of 2014, prices picked up in several metro areas during the first quarter.
‘Sales activity to start the year was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market. However, stronger demand without increasing supply led to faster price growth in many markets,’ he explained.
‘Sales could soften slightly in some of these markets seeing sharp price appreciation unless housing supply markedly improves and tempers its unhealthy level of growth,’ he added.
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The national median existing single family home price in the first quarter was $205,200, up 7.4% from the first quarter of 2014 when it was $191,100. The median price during the fourth quarter of 2014 increased 5.8% from a year earlier.
Total existing home sales, including single family and condo, declined 1.8% to a seasonally adjusted annual rate of 4.97 million in the first quarter from 5.06 million in the fourth quarter of 2014, but are 6.2% higher than the 4.68 million pace during the first quarter of 2014.
At the end of the first quarter, there were 2.00 million existing homes available for sale, slightly above the 1.96 million homes for sale at the end of the first quarter in 2014. The average supply during the first quarter was 4.6 months, down from 4.9 months a year ago. A supply of six to seven months represents a healthy balance of supply between buyers and sellers.
‘Home owners throughout the country have enjoyed accumulating household wealth through the steady rise in home values in the past few years. However, some homeowners are hesitant to move-up and sell because they aren’t confident they’ll find another home to buy,’ said Yun.
‘This trend, in addition to subpar home building activity, is leading to the ongoing inventory shortages and subsequent run-up in prices seen in many markets,’ he added.
The five most expensive housing markets in the first quarter were the San Jose, California, metro area, where the median existing single family price was $900,000 followed by San Francisco at $748,300, Honolulu at $699,300, Anaheim-Santa Ana in California at $685,700 and San Diego at $510,300.
The lowest cost metro areas in the first quarter were Youngstown-Warren-Boardman, Ohio, where the median single family home price was $64,300 then Cumberland, Maryland at $71,600, Rockford, Illinois at $78,600 and Toledo, Ohio at $83,800.
The national median existing condo price was $193,500 in the first quarter, up 1.5% from the first quarter of 2014 when it was $190,600) and 47 metro areas or 77% showed gains in their median condo price from a year ago while 14 areas had declines.
NAR president Chris Polychron said that with home prices on the rise in many parts of the country, low interest rates have helped keep affordability in check for those entering the market.
‘Realtors are reporting increased foot traffic this spring as more consumers are feeling confident about their financial situation and looking to lock-in before rates eventually start to climb,’ he pointed out.
‘With supply remaining tight, especially at the entry level price range, buyers will need the expertise and local market insight of a Realtor to help them through each intricate step of the buying process,’ he added.
A regional breakdown of the figures show that total existing home sales in the Northeast dropped 11.2% in the first quarter but still remained 2.2% above the first quarter of 2014. The median existing single family home price in the Northeast was $245,000 in the first quarter, up 2.4% from a year ago.
In the Midwest existing home sales declined 2% in the first quarter but are 6.3% higher than a year ago. The median existing single family home price in the Midwest increased 8.9% to $156,600 in the first quarter from the same quarter a year ago.
Existing home sales in the South fell slightly by 0.5% in the first quarter but are 7.8% above the first quarter of 2014. The median existing single family home price in the South was $182,300 in the first quarter, 8.2% above a year earlier.
In the West existing home sales increased 1.5% in the first quarter and are 5.4% above a year ago. The median existing single family home price in the West increased 5.8% to $295,500 in the first quarter from the first quarter of 2014.
This article was republished with permission from Property Wire.