U.S. home prices increased in about 93% of markets in the second quarter, according to the latest quarterly report from the National Association of Realtors (NAR).
The median price for an existing single-family home in the second quarter was $229,400, up 8.2% from about $212,000 in the second quarter of 2014.
The median price during the first quarter of this year increased 7.1% from a year earlier.
NAR says increasing home prices means many homeowners will see increasing equity in their properties, which, in turn, should spur more homeowners to sell. This, in turn, will help put more homes on the market, thus addressing the problem of low inventory that has been plaguing the housing market for more than a year.
Of 176 metropolitan statistical areas (MSAs) tracked by NAR, 163 showed home price gains based on closings in the second quarter compared with the second quarter of 2014. Only 13 MSAs, or about 7%, saw median prices decrease from a year earlier.
Of the MSAs that saw home prices increase, 34 experienced double-digit increases in the second quarter compared with only 19 in the second quarter of 2014, according to the report.
‘Steady rent increases, the slow rise in mortgage rates and stronger local job markets fueled demand throughout most of the country this spring,’ says Lawrence Yun, chief economist for NAR, in a release. ‘While this led to a boost in sales paces not seen since before the downturn, overall supply failed to keep up and pushed prices higher in a majority of metro areas.’
‘With home prices and rents continuing to rise and wages showing only modest growth, declining affordability remains a hurdle for renters considering homeownership – especially in higher-priced markets,’ he adds.
The five most expensive housing markets in the second quarter were the San Jose, Calif., metro area, where the median existing single-family price was $980,000; San Francisco, $841,600; Anaheim-Santa Ana, Calif., $685,700; Honolulu, $698,600; and San Diego, $547,800.
The five lowest-cost metro areas in the second quarter were Cumberland, Md., where the median single-family home price was $82,400; Youngstown-Warren-Boardman, Ohio, $85,000; Rockford, Ill., $94,700; Decatur, Ill., $96,000; and Elmira, N.Y., $98,300.
Total existing-home sales for the second quarter reached a seasonally adjusted annual rate of 5.30 million, an increase of 6.6% compared with the annual rate of 4.97 million in the first quarter and an increase of 8.5% compared with the annual rate of 4.89 million in the second quarter of 2014.
‘The ongoing rise in home values in recent years has greatly benefited homeowners by increasing their household wealth,’ says Yun. ‘In the meantime, inequality is growing in America because the downward trend in the homeownership rate means these equity gains are going to fewer households.’
Despite the drop in the U.S. homeowner rate, there are still very few homes available on the market. At the end of the second quarter, there were 2.30 million existing homes available for sale, slightly above the 2.29 million homes for sale at the end of the second quarter of 2014. The average supply during the second quarter was 5.1 months – down from 5.5 months a year earlier.
Looking at total existing-home sales by region, sales in the Northeast increased 10.3% compared with the first quarter and increased 8.6% compared with the second quarter of 2014. The median existing single-family home price in the Northeast was $269,300, up 5.2% from a year earlier.
Existing-home sales in the Midwest increased 13.4% compared with the first quarter and increased 12.7% compared with the second quarter of 2014. The median existing single-family home price in the Midwest was $182,000, an increase of 8.7% compared with the second quarter of 2014.
Existing-home sales in the South increased 1.1% compared with the first quarter and increased 6.3% compared with the second quarter of 2014. The median existing single-family home price in the South was $202,900, an increase of 8.7% compared with a year earlier.
Existing-home sales in the West increased 8.1% compared with the first quarter and were up 8.1% compared with the second quarter of 2014. The median existing single-family home price in the West was $325,200, an increase of 9.6% compared with a year earlier.