Us property prices rise at fastest pace in a year

Photo credit: Cyndie

US property prices have risen at their fastest pace in a year, according to the National Association of Realtors.

Existing home sales edged up 1.2 per cent in February 2015 compared to January, taking transactions to 4.7 per cent higher than a year ago; the fifth month in a row of annual sales increases.

Even with the marginal increasing in sales, though, constrained inventory levels fuelled price growth.

Total housing inventory at the end of February increased 1.6 per cent to 1.89 million existing homes available for sale, but remains 0.5 per cent below a year ago (1.90 million). As a result, the median existing-home price for all housing types in February reached $202,600, 7.5 per cent up year-on-year - the 36th consecutive month of year-over-year price gains and the largest rise since February 2014.

Lawrence Yun, NAR chief economist, says although February sales showed modest improvement, there has been some stagnation in the market in recent months: "Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels."

"Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise."

Yun also attributes the weak sales growth in the Northeast and Midwest to the severe, below-freezing winter weather.

"With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages," adds Yun.