About 45 percent of 149 metropolitan areas surveyed had double-digit increases in median existing single-family home prices from second-quarter 2004 to second-quarter 2005, the National Association of Realtors trade group reported today. Seven areas had price declines.
The national median existing single-family home price was $208,500 in the second quarter, up 13.6 percent from the second quarter of 2004 when the median price was $183,500. The median is a typical market price where half of the homes sold for more and half sold for less. In all, 94 metro areas saw increases above the U.S. historic average of 6.4 percent, the association reported.
David Lereah, NAR’s chief economist, said the price gains are unprecedented. “When you look at appreciation of home prices relative to the overall rate of inflation, these are the strongest increases on record,” he said. “The continuing shortages of housing inventory are driving the price gains.”
Since 1968, prices generally have risen one to two percentage points faster than the overall rate of inflation; the historic average price increase appears high because there was a period of high inflation in the U.S. during the 1970s and early 1980s, the association noted.
NAR President Al Mansell of Salt Lake City said, “Given the fact that the second quarter was a record for home sales, it’s clear that many people find it is an excellent time to buy a home, even with stiff competition from other buyers,” he said.
The strongest price increase in the nation was in the Phoenix-Mesa-Scottsdale area of Arizona, where the first quarter price of $243,400 rose 47 percent from a year earlier. Next was Cape Coral-Fort Meyers, Fla., at $266,800, up 45.2 percent from the second quarter of 2004. Third was the Palm Bay-Melbourne-Titusville area of Florida, with a second-quarter median price of $204,000, up 40 percent in the last year.
Six of 10 metro areas that saw prices rise most from second-quarter 2004 to second-quarter 2005 are in Florida; two are in Arizona; one is in Nevada; and one is in North Carolina.
The areas experiencing price declines were lower-priced markets, with one or both of the conditions necessary for price softness – local economic weakness, primarily in jobs, or a large supply of homes for sale in the local area. Typically, these are temporary conditions. “Once again, since these areas had not seen rapid gains in the past, there is no evidence of bubbles popping,” Lereah said.
Median second-quarter metro-area resale prices ranged from $73,400 in Danville, Ill., to nearly 10 times that amount in the San Francisco-Oakland-Fremont area of California where the median price was $726,900. The second most expensive area in the United States was Anaheim-Santa Ana (Orange Co., Calif.) at $696,100, followed by San Diego-Carlsbad-San Marcos, Calif., at $605,600.
Other low-cost markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, the second least-costly metro, at $82,900, and Decatur, Ill., with a second-quarter typical resale home price of $86,800.
Prices dropped 3.5 percent from second-quarter 2004 to second-quarter 2005 in Kalamazoo-Portage, Mich.; and dropped 2.7 percent in the Youngstown-Warren-Boardman area (Ohio and Pennsylvania); 1 percent in the Chattanooga area (Tennessee and Georgia); 1 percent Indianapolis, 0.6 percent in Topeka, Kansas; 0.3 percent in Dayton, Ohio; and 0.2 percent in Cedar Rapids, Iowa.
Regionally, the strongest increase was in the West where the median existing single-family home price rose 19.5 percent over the last year to $312,600 during the second quarter. After Phoenix-Mesa-Scottsdale, the strongest increase in the West was in Reno-Sparks, Nev., where the median price of $357,400 rose 32.1 percent from a year earlier, followed by the Tucson area, at $228,500, up 30 percent, and Honolulu, at $577,800, up 28.1 percent from the second quarter of 2004.
In the Northeast, the median resale price during the second quarter was $243,100, up 13.1 percent from a year earlier. The strongest increase in the region was in the Atlantic City, N.J., area, at $244,900, up 25.7 percent from the second quarter of 2004, followed by the Allentown-Bethlehem-Easton area of Pennsylvania and New Jersey, with a median price of $358,500, up 23.9 percent, and Edison, N.J., at $394,100, up 22.8 percent.
In the Midwest, the second-quarter median existing-home price of $167,800 rose 12.1 percent from the same period in 2004. The strongest increase in the Midwest was in the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price of $133,900 was 24.0 percent higher than the second quarter of 2004. Next came Rockford, Ill., at $122,700 in the second quarter, up 18.6 percent, and Danville, Ill., up 16.9 percent in the last year.
In the South, the typical existing home price was $179,400 in the second quarter, up 5.7 percent in contrast a year earlier. After the Cape Coral-Fort Meyers and Palm Bay-Melbourne-Titusville areas of Florida, the strongest increase in the South was in the Orlando area, at $232,200, up 36.5 percent from the second quarter of 2004. Next was the Sarasota-Bradenton-Venice area of Florida, where the second quarter median price of $367,800 was 34.3 percent higher than a year ago, and Miami-Ft. Lauderdale-Miami Beach, at $371,600, up 31.7 percent.
Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. Beginning with this report, NAR has expanded the number of areas being covered and is using MSA definitions announced by OMB in 2003 and revised in 2004. As a result, some new areas were created, some removed and others revised, the association noted. A list of counties included in MSA definitions is available at: http://www.census.gov/population/estimates/metro-city/0312msa.txt.
Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. NAR began publication of metropolitan area median home prices in 1982.
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