Rising sales and low supply push up US house prices

Photo credit: Cyndie

Rising sales and low supply levels pushed up US house prices in the first quarter of 2016.

The latest quarterly report from the National Association of Realtors shows that the median existing single-family home price increased in 87 per cent of measured markets, with 154 out of 178 metropolitan statistical areas showing gains compared to the same period of 2015. 24 areas (13 per cent) recorded lower median prices from a year earlier.

There were more rising markets in the first quarter compared to the fourth quarter of 2015, when price gains were recorded in 81 per cent of metro areas.

Lawrence Yun, NAR chief economist, says home prices chugged along at a “robust pace”.

“The solid run of sustained job creation and attractive mortgage rates below 4 percent spurred steady demand for home purchases in many local markets,” he comments. “Unfortunately, sales were somewhat subdued by supply and demand imbalances and broadly rising prices above wage growth. As a result, the path to homeownership so far this year remains strenuous for a segment of prospective buyers in the most competitive areas.”

The national median existing single-family home price in the first quarter was $217,600, up 6.3 per cent from the first quarter of 2015 and up 6.7 per cent from the preceding quarter.

US price growth picks up speed

16th February 2016

Sales of US property cooled in the final stretch of 2015, but price growth continued to pick up speed, according to the National Association of Realtors.

Total existing-home sales declined 5.4 per cent to a seasonally adjusted annual rate of 5.18 million in the fourth quarter of 2015 – down from 5.48 million in the third quarter. Prices, though, rose year-on-year, with median single-family home values up in 81 per cent of the markets measured by the NAR. This was slightly lower than the 87 per cent recorded in Q3 2015, but growth gathered momentum nonetheless: 30 metro areas (17 per cent) saw prices jump by double digits, up from 20 in the previous quarter.

For all of 2015, an average of 89 per cent of measured metro areas saw increasing home prices, up from 83 per cent recorded in 2014.

Lawrence Yun, NAR chief economist, says faster price growth reawakened in the final months of 2015, thanks to the growing pressure of low supply: “Even with slightly cooling demand, the unshakeable trend of inadequate supply in relation to the overall pool of prospective buyers inflicted upward pressure on home prices in several metro areas.

“As a result, homeownership continues to be out of reach for a number of qualified buyers in the top job producing, but costliest, parts of the country – especially on the West Coast and parts of the South.”

The national median existing single-family home price in the fourth quarter was $222,700, up 6.9 per cent from the fourth quarter of 2014 ($208,400). The median price during the third quarter of 2015 increased 5.4 per cent from the third quarter of 2014.

Yun forecasts little change as 2016 continues, with no rapid increase in construction on the cards. Rising home prices, despite lower mortgage rates and an increase in the national family median income, caused affordability to fall in the fourth quarter compared to the fourth quarter of last year.