NAR: Housing Supply at ‘Pitiful Levels’

Posted by Michael Bates on August 17, 2017 No Comments

According to the latest quarterly report from the National Association of Realtors, the national median existing single-family home price in the second quarter was $255,600, which is up 6.2% from the second quarter of 2016 ($240,700) and surpasses the third quarter of last year ($241,300) as the new peak quarterly median sales price. The median price during the first quarter increased 6.9% from the first quarter of 2016.

Single-family home prices last quarter increased in 87% of measured markets, with 154 out of 178 metropolitan statistical areas (MSAs) showing sales-price gains in the second quarter compared with the second quarter of 2016. Twenty-three MSAs recorded lower median prices from a year earlier.

Lawrence Yun, NAR’s chief economist, says home prices in most metro areas continued their fast ascent in the second quarter because supply remained at pitiful levels.

“The 2.2 million net new jobs created over the past year generated significant interest in purchasing a home in what was an extremely competitive spring buying season,” he says. “Listings typically flew off the market in under a month – and even quicker in the affordable price range – in several parts of the country. With new supply not even coming close to keeping pace, price appreciation remained swift in most markets.”

Total existing-home sales, including single family and condos, slipped 0.9% to a seasonally adjusted annual rate of 5.57 million in the second quarter, from 5.62 million in the first quarter, but are still 1.6% higher than the 5.48 million pace during the second quarter of 2016.

At the end of the second quarter, there were 1.96 million existing homes available for sale, which was 7.1% below the 2.11 million homes for sale at the end of the second quarter in 2016. The average supply during the second quarter was 4.2 months – down from 4.6 months in the second quarter of last year.

Last quarter, a rise in the national family median income (to $71,529) was not enough to offset weaker affordability from the combination of higher mortgage rates compared to a year ago and rising home prices. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $56,169; a 10% down payment would require an income of $53,213; and $47,300 would be needed for a 20% down payment.

“Mortgage rates have subsided in recent months, which has only somewhat helped take away some of the sting prospective buyers are experiencing with the deteriorating affordability conditions in many areas,” adds Yun. “Household incomes may be rising and giving consumers assurance that now is a good time to buy, but these severe inventory shortages will likely continue to be a drag on sales potential the second half of the year.”

The five most expensive housing markets in the second quarter were the San Jose metro area, where the median existing single-family price was $1,183,400; San Francisco, $950,000; Anaheim-Santa Ana, Calif., $788,000; urban Honolulu, $760,600; and San Diego, $605,000.

 

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