Lack of supply pushed up prices across most of the US in first quarter of 2018
A lack of stock, with inventory levels hovering at all-time lows, has weighed down home sales and fuelled faster price rises in the first three months of 2018 in the United States, the latest research shows.
The national median family home price increased by 5.7% in the first quarter to $245,500, rising in in 91% of metropolitan statistical areas covered by the index from the National Association of Realtors.
Indeed, some 30% of metros recorded double digit increases, up from 15% in the fourth quarter of 2017, the index also shows.
Overall, record low inventory levels caused the housing market to get off to a slow start in 2018, causing even more upward pressure on home prices in a majority of markets, according to Lawrence Yun, NAR chief economist.
‘Following the same trend over the last couple of years, a strengthening job market and income gains are not being met by meaningful sales gains because of unrelenting supply and affordability headwinds,’ he pointed out.
He explained that real estate agents in areas with strong job markets report that consumer frustration is rising. ‘Home buyers are increasingly struggling to find an affordable property to buy, and the prevalence of multiple bids is pushing prices further out of reach,’ Yun added.
Meanwhile, total sales decreased 1.5% in the first three months of the year and are 1.7% lower than the same period of 2017. At the end of the first quarter, there were 1.67 million existing homes available for sale, some 7.2% below the first quarter of last year.
‘Prospective buyers in many markets are realizing that buying a home is becoming more expensive in 2018. Rapid price gains and the quick hike in mortgage rates are essentially eliminating any meaningful gains buyers may be seeing from the combination of improving wage growth and larger pay cheques following this year’s tax cuts,’ said Yun.
He believes that home builders need to start constructing more family homes and condominiums to overcome the rampant supply shortages that are hampering affordability.
The most expensive housing market was San Jose with a median price of $1,373,000, followed by San Francisco-Oakland-Hayward at $917,000, Anaheim-Santa Ana-Irvine at $810,000, urban Honolulu at $775,500, and San Diego-Carlsbad at $610,000.
The five lowest cost metro areas in the first quarter were Decatur in Illinois at $73,000, Cumberland in Maryland at $86,200, Youngstown-Warren-Boardman in Ohio at $91,300, Elmira in New York at $100,800, and Binghamton in New York at $103,000.
Sales in the Northeast fell by 8.5% and are 8.1% below the first quarter of 2017 with the area recording a median price of $267,400, up 4.6% from a year ago while sales fell 6.9% in the Midwest and are 1.8% below a year ago with a median price of $187,100.
In the South sales increased by 3.7% and are 0.7% higher than the first quarter of 2017with a median price of $220,400, some 5.5% up on a year ago. Sales fell by 1.1% in the West and are now 2.2% lower than the first quarter of 2017 with a median price of $371,300.