Sales price of US homes soars at end of 2016

2016 drew to a close with a strong finish for US housing, with the majority of market seeing sales prices reach or surpass their peak levels.

The final three months of the year saw the best quarterly sales pace of the year, according to the National Association of Realtors, pushing available supply to record lows and causing price appreciation to speed up. As a result, sales prices in over half of measured markets since 2005 are now at or above their previous peak level.

The median existing single-family home price increased in 89 per cent of measured markets, with 158 out of 178 metropolitan statistical areas showing sales price gains in the fourth quarter of 2016 compared with the fourth quarter of 2015. 20 areas (11 per cent) recorded lower median prices from a year earlier.

31 metro areas in the fourth quarter (17 per cent) experienced double-digit increases — an increase from 14 per cent in the third quarter. For all of 2016, an average of 87 per cent of measured markets saw increasing home prices, up from the averages in 2015 (86 per cent) and 2014 (75 per cent).

Lawrence Yun, NAR chief economist, says home-price gains showed little evidence of letting up through all of 2016: “Buyer interest stayed elevated in most areas thanks to mortgage rates under 4 per cent for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment. At the same time, the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”

The national median existing single-family home price in the fourth quarter of 2016 was $235,000, which is up 5.7 percent from the fourth quarter of 2015 ($222,300). The median price during the third quarter of 2016 increased 5.4 percent from the third quarter of 2015.

“Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets. The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions,” Yun adds.

At the end of the fourth quarter, there were 1.65 million existing homes available for sale 2, which was 6.3 percent below the 1.76 million homes for sale at the end of the fourth quarter in 2015 and the lowest level since NAR began tracking the supply of all housing types in 1999.