Last year saw strongest house prices growth in the US for seven years
Nationwide residential property prices in the United States have experienced their strongest year on year growth for seven years, according to the latest data from the National Association of Realtors.
A growing number of metropolitan areas had higher median home prices in the fourth quarter, its latest quarterly report shows.
The median existing single family home price increases in 133 out of 152 metropolitan statistical areas (MSAs) based on closings in the fourth quarter compared with same quarter in 2011, while 19 areas had price declines.
In the third quarter 120 areas showed increases from a year earlier, while in the fourth quarter of 2011 only 29 metros were up.
‘Home sales are on a sustained uptrend, mortgage interest rates are hovering near record lows and unsold inventory is at the lowest level in 12 years,’ said NAR chief economist Lawrence Yun.
‘Home sales are being fuelled by a pent up demand and job creation, along with still favourable affordability conditions and rents rising at faster rates. Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play,’ he explained.
Yun added that more housing construction is needed to relieve some of the pressure in the market and keep home prices from overheating.
The national median existing single family home price was $178,900 in the fourth quarter, up 10% from $162,600 in the fourth quarter of 2011, which is the strongest year in year on year price increase since the fourth quarter of 2005 when the median price jumped 13.6%. In the third quarter the price rose 8.8% from a year earlier.
The median price is where half of the homes sold for more and half sold for less. Medians are more typical than average prices, which are skewed higher by a relatively small share of upper end transactions.
A shrinking market share of lower priced homes continues to account for some of the price growth. Distressed homes, that is foreclosures and short sales generally sold at deep discounts, accounted for 23% of fourth quarter sales, down from 30% a year ago.
Total existing home sales, including single family and condo, rose 55 to a seasonally adjusted annual rate of 4.90 million in the fourth quarter from 4.66 million in the third quarter, and were 12.1% above the 4.37 million pace during the fourth quarter of 2011. Sales in the last quarter were at the highest level since the fourth quarter of 2009 when they reached 4.95 million.
At the end of the fourth quarter there were 1.82 million existing homes available for sale, which is 21.6% below the close of the fourth quarter of 2011 when 2.32 million homes were on the market. Unsold inventory is at the lowest level since January 2001 when there were 1.78 million homes for sale.
NAR president Gary Thomas said that favourable affordability conditions dominate the landscape. ‘In reality, home prices over corrected on the downside and homes in most of the country were selling for less than replacement construction costs, which means they were undervalued,’ he explained.
‘At the same time we've had record low mortgage interest rates and slow but steady improvements in median family income. Combined, these factors boosted housing affordability conditions to the highest on record in 2012,’ he added.
The national median existing condo price was $179,900 in the fourth quarter, up 12.2% from the fourth quarter of 2011. Some 47 metros showed increases in their median condo price from a year ago, one was unchanged and eight areas had declines.
Regionally, existing home sales in the Northeast increased 2.2% in the fourth quarter and are 12.9% above the fourth quarter of 2011. The median existing single family home price in the Northeast rose 0.7% to $228,400 in the fourth quarter from a year ago.
In the Midwest, existing home sales rose 5.6% in the fourth quarter and are 18.3% higher than a year ago. The median existing single family home price in the Midwest increased 9.2% to $143,800 in the fourth quarter from the same quarter in 2011.
Existing home sales in the South rose 5% in the fourth quarter and are 13.2% above the fourth quarter of 2011. The regional median existing single family home price was $160,100 in the fourth quarter, up 9.1% from a year earlier.
In the West, which is the region most impacted by limited housing supplies, existing home sales increased 5.9% in the fourth quarter, and are 5% higher than a year ago. The median existing single family home price in the West jumped 20% to $245,200 in the fourth quarter from the fourth quarter of 2011.