Home prices continued to increase in a majority of metropolitan areas in the third quarter, but the rate of appreciation is clearly slowing, a report from the National Association of Realtors (NAR) shows.
The average price for a single-family home in the third quarter was $217,300, up 4.2% compared to the second quarter and up 4.9% compared to the third quarter of 2013, according to NAR.
But the rate of appreciation is slowing: Four major regions saw increases at or below 5% from a year ago, according to the report, whereas at the start of 2014, a majority metropolitan statistical areas (MSAs) were reporting year-over-year increases of more than 9%.
Still, the average existing single-family home price increased in 125 out of 172 or 73% of MSAs measured by the report, in the third quarter compared with the third quarter of 2013. Forty-seven areas – or 27% – recorded lower median prices compared to a year earlier.
The number of MSAs reporting flat or decreasing home prices has been increasing each month since about mid-year.
Lawrence Yun, chief economist for NAR, says home prices are normalizing after the rapid gains seen in 2013.
‘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 says. ‘Moreover, there are a good number of local markets that are still remarkably affordable with median prices at or under $200,000.’
NAR reports that existing-home sales increased to a seasonally adjusted annual rate of 5.12 million in the third quarter, up 5.2% compared to 4.87 million in the second quarter, but 3.8% below the 5.32 million pace during the third quarter of 2013.
Total housing inventory – a key factor in price appreciation – continued to make strides at the end of the third quarter with 2.30 million existing homes available for sale, an increase of about 6% compared to a year ago. The average supply during the third quarter was 5.4 months, up from 5.0 months in the third quarter of 2013.
NAR points out that a supply of six to seven months represents a rough balance between buyers and sellers.
The report's findings are more or less in line with those of CoreLogic, which reported earlier this week that home prices, including distressed sales, dropped 0.1% in September compared to August. As of September, home prices, including distressed sales, had climbed 5.6% nationally since September 2013, the CoreLogic report shows.
To view NAR's full report – which includes a breakdown of home price appreciation/depreciation by region and MSA – click here.