Tight inventories of homes for sale helped push home prices higher in the first quarter. The median price of existing single-family homes rose in 87 percent or 154 of 178 of the major metro areas across the U.S. in the first quarter, according to the latest quarterly report by the National Association of REALTORS®. What’s more, 28 metro areas, or 16 percent, saw double-digit increases from a year ago.
“The solid run of sustained job creation and attractive mortgage rates below 4 percent spurred steady demand for home purchases in many local markets,” says Lawrence Yun, NAR’s chief economist. “Unfortunately, sales were somewhat subdued by supply and demand imbalances and broadly rising prices above wage growth. As a result, the path to home ownership so far this year remains strenuous for a segment of prospective buyers in the most competitive areas.”
The median existing single-family home price was $217,600 in the first quarter nationwide. That is up 6.3 percent from a year ago, according to NAR’s data.
“Current home owners in many metro areas — especially those who purchased a home immediately after the downturn — have enjoyed a sizeable boost in housing equity and household wealth in recent years,” Yun says. “At a time of stagnant wage growth and mounting rent increases, the same cannot be said for renters. Their inability to reach the market because of affordability and supply restrictions is contributing to rising wealth inequality in the U.S.”
Only 24 areas or 13 percent of the metro areas analyzed posted lower median prices compared to a year earlier.
Total existing-home sales – which include single-family and condo sales – climbed 1.7 percent to a seasonally adjusted annual rate of 5.29 million in the first quarter. Existing-home sales are 4.8 percent higher than the 5.05 million pace a year ago.
“In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing-sales since 2007 (5.66 million),” Yun says. “The demand for buying is there, but unless the stock of new and existing-homes for sale increases significantly – especially in several markets in the West – the housing market will struggle to reach its full potential.”
The supply of homes for sale remains tight. By the end of the first quarter, 1.98 million existing homes were available for sale nationwide, fewer than the 2.01 million homes for sale at the end of the first quarter in 2015.