Shortage of homes hitting sales and prices in the US, third quarter figures show
A severe shortage of homes hit property sales in the United States in the third quarter of 2017 and kept prices from rising at a steady in metros across the country, the latest research shows.
The national median existing single family home price in the third quarter was $254,000, up 5.3% from the same quarter of 2016, according to the data from the National Association of Realtors (NAR).
Prices increased in 92% of the 177 metropolitan statistical areas (MSAs) showing sales price gains in the third quarter compared with the third quarter of 2016, the most since the second quarter of 2015 while 8% recorded lower median prices from a year earlier.
According to Lawrence Yun, NAR chief economist, the housing market’s performance during the third quarter was underwhelming. ‘The stock market’s climb to new record highs, the continued stretch of outstanding job growth and mortgage rates under 4% kept home buyer demand at a very robust level throughout the summer,’ he said.
‘Unfortunately, the pace of new listings were unable to replace what was quickly sold. Home shoppers had little to choose from, and many had out outbid others in order to close on a home. The end result was a slowdown in sales from earlier in the year, steadfast price growth and weakening affordability conditions,’ he explained.
‘While there was some moderation in price appreciation last quarter, home prices still far exceed incomes in several parts of the country, especially in the largest markets in the South and West where new home construction simply is not keeping up with job growth,’ he added.
A breakdown of the figures shows that 11% of metro areas recorded double digit increases, down from 13% in the second quarter while overall, there were more rising markets in the third quarter compared to the second quarter, when price gains were recorded in 87% of metro areas.
Total existing home sales, including single family and condos, fell by 3.1% to a seasonally adjusted annual rate of 5.39 million in the third quarter from 5.56 million in the second quarter, but are still 0.2% higher than the 5.38 million pace during the third quarter of 2016.
At the end of the third quarter there were 1.90 million existing homes available for sale which was 6.4% below the 2.03 million homes for sale at the end of the third quarter in 2016. The average supply during the second quarter was 4.2 months, down from 4.6 months in the third quarter of last year.
‘Affordability pressures are frustratingly occurring in places where jobs are plentiful and incomes are rising. Without a significant boost in new and existing inventory to alleviate price growth, job creation could slow in high cost areas in upcoming years if residents begin exiling to more affordable parts of the country,’ Yun pointed out.
The five most expensive housing markets in the third quarter were the San Jose metro area, where the median existing single family price was $1,165,000, followed by San Francisco at $900,000, Anaheim–Santa Ana in California at $790,000, urban Honolulu at $760,200 and San Diego at $607,000.
The five lowest cost metro areas in the third quarter were Decatur in Illinois at $86,300, Youngstown–Warren–Boardman in Ohio at$88,900, Cumberland in Maryland at $96,400, Wichita Falls in Texas at$113,800 and Elmira in New York at $117,300.
Total existing home sales in the Northeast fell by 7% in the third quarter and are 0.5% below the third quarter of 2016 while the median existing single family home price was $283,800 in the third quarter, up 4.1% from a year ago.
In the Midwest, existing home sales fell 3.3% and are 0.8% below a year ago while the median existing single family home price was up by 5.6% to $202,400 in the third quarter from the same quarter a year ago.
Existing home sales in the South fell 4.4% but are 0.2% higher than the third quarter of 2016 while the median home price was $226,100 in the third quarter, 5.5% above a year earlier.
In the West, existing home sales increased 2.8% and are 1.9% above a year ago while the median home price increased by 7% to $373,700 in the third quarter from the third quarter of 2016.