The housing market saw a series of ups and downs in Q2 2017, the majority of which were largely driven by low inventory unable to meet the demand of would-be buyers. This imbalance drove home prices to rise 6.2 percent, easily eclipsing the previous Q3 2016 peak of $241,300.
The Q2 median single-family home price was $255,600, a 6.2 percent year-over-year and 6.9 percent quarter-over-quarter increase.
Low inventory pushes home prices up
Single-family home prices increased in 154 out of 178 measured metropolitan statistical areas. Twenty-three areas experienced double-digit increases, down from 30 in Q1 2017. Overall, there was a slight uptick in “rising markets,” which are defined as metros that experienced some level of price increase.
Total housing inventory dropped 0.5 percentage points month-over-month to 1.96 million homes for sale. Year-over-year inventory declined 7.1 percentage points and is in its 25th consecutive month of year-over-year declines. Unsold inventory is at a 4.3-month supply, a 0.3 percent year-over-year decline.
NAR Chief Economist Lawrence Yun says the quarter’s performance revolved around robust job growth, strong demand and inadequate inventory supply.
“The 2.2 million net new jobs created over the past year generated significant interest in purchasing a home in what was an extremely competitive spring buying season,” Yun said.
“Listings typically flew off the market in under a month — and even quicker in the affordable price range — in several parts of the country. With new supply not even coming close to keeping pace, price appreciation remained swift in most markets.
“The glaring need for more new home construction is creating an affordability crisis that needs to be addressed by policy officials and local governments,” he added.
“An increasing share of would-be buyers are being priced out of the market and are unable to experience the wealth building benefits of homeownership.”