Rarely does a great deal go unnoticed among modern American shoppers, and in no industry is this more true than housing.
So with mortgage rates hovering at three-year lows, those thinking it’s a good time to buy a house are not alone. And the basic principles of supply and demand are creating the right conditions for home prices across the nation’s metros to keep gaining ground.
In Q2 2016, 148 out of the 178 metropolitan statistical areas (MSAs) measured by the National Association of Realtors — a total of 83 percent — experienced median home price growth year-over-year, down slightly from the 87 percent of markets that had increases in the first quarter.
Moreover, 25 MSAs had double-digit year-over-year median home price gains, a small decrease from the first quarter’s 28 metro areas.
Despite modest growth rate reductions compared to the first three months of the year, sellers still have a leg up thanks to fast home sales and diminishing inventory, according to NAR’s chief economist Lawrence Yun.
“Steadily improving local job markets and mortgage rates teetering close to all-time lows brought buyers out in force in many large and middle-tier cities,” Yun said in a press release. “However, with homebuilding activity still failing to keep up with demand and not enough current homeowners putting their home up for sale, prices continued their strong ascent – and in many markets at a rate well above income growth.”
And new construction simply isn’t keeping pace with demand — causing homes to stay on the market for around a month on average in Q2, with more than 40 percent of listings selling at or over list price.
“Many listings in a majority of markets – and especially those in lower price ranges — had multiple offers and went under contract quickly because of severely inadequate supply,” Yun added. “This in turn dented affordability and without a doubt priced out a segment of buyers attempting to seek relief from fast-growing rents.”
Until this quarter, the peak existing single-family home price was $229,400, recorded in Q2 of last year. However, Q2 2016 surpassed that number by 4.9 percent, registering a median single-family home price of $240,700.
“Primarily from repeat buyers moving up or trading down, existing sales increased each month last quarter and could’ve been even higher if not for a few speedbumps,” explained Yun. “Closings were slowed a bit by meager supply levels and home prices in many areas that are still rising too fast.”
Regional views
Growth rates for total existing home-sales fared differently among the four U.S. regions, with all four experiencing noticeable median home price gains:
Northeast
- 7.6 increase in total existing-home sales in Q2, 11.3 percent rise year-over-year
- Median home price up 1.6 percent from a year prior to $273,600
Midwest
- 10.4 increase in total existing-home sales in Q2, 6.6 percent rise year-over-year
- Median home price up 5.1 percent from a year prior to $191,300
South
- 0.3 increase in total existing-home sales in Q2, 4.2 percent rise year-over-year
- Median home price up 5.9 percent from a year prior to $214,900
West
- 1.4 increase in total existing-home sales in Q2, 2.2 percent decline year-over-year
- Median home price up 6.5 percent from a year prior to $346,500
Furthermore, in Q2 the five metros with the priciest housing markets were:
- San Jose, California, metro area (existing single-family price: $1,085,000 — this is the first time ever that San Jose’s median price has exceeded $1 million)
- San Francisco ($885,600)
- Anaheim-Santa Ana, California ($742,200)
- urban Honolulu ($725,200)
- San Diego ($589,900)
The five lowest-cost metro areas in the second quarter:
- Youngstown-Warren-Boardman, Ohio, ($85,400)
- Cumberland, Maryland ($94,900)
- Decatur, Illinois ($95,600)
- Binghamton, New York ($105,500)
- Rockford, Illinois ($109,000)
According to NAR, the trade association “releases quarterly median single-family price data for approximately 170 Metropolitan Statistical Areas (MSAs).
“In some cases the MSA prices may not coincide with data released by state and local Realtor associations. Any discrepancy may be due to differences in geographic coverage, product mix, and timing. In the event of discrepancies, Realtors are advised that for business purposes, local data from their association may be more relevant.”