Home prices up in 9 out of 10 metropolitan areas NAR says
Home-price growth is becoming more widespread, with year-over-year gains in almost nine-tenths of the country’s metropolitan statistical areas, according to data released Monday by the National Association of Realtors.
The median price for existing single-family homes rose in 133 of 152 metropolitan statistical areas in the fourth quarter compared with the same period in the prior year. That result is a jump from year-over-year gains among just 29 areas for the fourth quarter of 2011.
“Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates,” said Lawrence Yun, NAR’s chief economist, in a statement. “Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play.”
Looking at cities, the Phoenix-Mesa-Scottsdale areas in Arizona saw the largest year-over-year price gain for the fourth quarter, with prices rising 33.9%, according to NAR. However, this area took a particularly bad beating when the housing bubble burst, and prices there remain relatively low.
Meanwhile, Kingston, N.Y., located about 100 miles north of Manhattan, saw the lowest price change, with a year-over-year decline of 7.9% for the fourth quarter.
Looking at the U.S., NAR reported that the national median price for existing single-family homes rose to $178,900 in the fourth quarter, up 10% from the same period in the prior year. That 10% jump was the largest year-over-year gain since the fourth quarter of 2005. By region, prices rose 20.1% in the West, 9.2% in the Midwest, 9.1% in the South and 0.7% in the Northeast.
Homebuilders have benefitted from the recovering market. An exchange-traded fund of builders, the iShares Dow Jones U.S. Home Construction Index Fund, has seen shares rise about 61% over the past 12 months.
Low inventory has been supporting price growth – unsold inventory is at the lowest level since 2001. Markets such as San Francisco-Oakland-Fremont in California saw outsized year-over-year price growth in the fourth quarter, with prices up 28.3%.
Also contributing to higher prices are fewer distressed sales. Foreclosures and short sales are making up a smaller portion of the market, declining to 23% in the fourth quarter, compared with 30% a year earlier, according to NAR.
Despite gains, price levels remain relatively low in the U.S., around 30% below a 2006 bubble peak. Indeed, NAR’s index of housing affordability reached a record high in 2012, thanks to favorable pricing conditions, which also include persistently low mortgages rates. Still, economists are concerned that overly restrictive lending standards are preventing many would-be borrowers from participating in the market, including first-time buyers.
– Ruth Mantell