Home sales in the US record strongest quarterly growth for a decade

The United States residential property market saw its strongest quarterly sales pace for a decade in the first three months of 2017 which is causing prices to accelerate, the latest index report shows.

Property prices have now increased for three quarter in a row with the national median price up 6.9% compared to the first quarter of 2016 to $232,100, according to the data from the National Association of Realtors (NAR).

The figures also show that it was the fastest growth since the second quarter of 2015 with
85% of metropolitan statistical areas measured showing sales price gains in the first quarter compared with the first quarter of 2016. Some 14% recorded lower median prices from a year earlier.

According to Lawrence Yun, NAR chief economist, continual supply shortages is fuelling faster price appreciation across the country. ‘Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,’ he said.

‘Those able to successfully buy most likely had to outbid others, especially for those in the starter home market, which in turn quickened price growth to the fastest quarterly pace in almost two years,’ he explained.

He also pointed out that several metro areas with the healthiest job gains in recent years continue to see a large upswing in buyer demand but lack the commensurate ramp up in new home construction. ‘This is why many of these areas, in particular several parts of the South and West, are seeing unhealthy price appreciation that far exceeds incomes,’ he added.

Overall 30 or 17% of metro areas recorded double digit increases in the first quarter of the year, unchanged from the fourth quarter of 2016. There were slightly fewer rising markets in the first quarter compared to the fourth quarter of 2016, when price gains were recorded in 89% of metro areas.

Total existing home sales increased by 1.4% to a seasonally adjusted annual rate of 5.62 million in the first quarter, the highest since the first quarter of 2007, and are 5% higher than the 5.36 million pace during the first quarter of 2016.

At the end of the first quarter, there were 1.83 million existing homes available for sale, which was 6.6% below the 1.96 million homes for sale at the end of the first quarter in 2016. The average supply during the first quarter was 3.7 months, down from 4.2 months in the first quarter of last year.

Yun believes that high demand is poised to continue heading into the summer as long as job gains continue. ‘However, many metro areas need to see a significant rise in new and existing inventory to meet this demand and cool down price growth,’ he said.

The five most expensive housing markets in the first quarter were San Jose in California, where the median price was $1,070,000, followed by San Francisco at $815,000, Anaheim-Santa Ana at $750,000, Honolulu at $746,000 and San Diego at $564,000.

A breakdown of the figures shows that total existing home sales in the Northeast fell by 2.2% in the first quarter but are 4.2% above the first quarter of 2016. The median existing home price in the Northeast was $255,000, up 2.2% from a year ago.

In the Midwest, existing home sales fell 4.3% but are still 1.6% above a year ago with the median home price up by 5.75 to $176,600 in the first quarter from the same quarter a year ago.

Existing home sales in the South were up by 5.8% and are 5.8% higher than the first quarter of 2016. The median existing home price was $209,000, up 8.8% from a year earlier.

In the West existing home sales rose 1.6% and are 7.4% above a year ago with a median price of $342,500, up 8.4% in the first quarter from the first quarter of 2016.

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