Us house price growth speeds up
Photo credit: Cyndie
The median existing single-family home price increased in 86 per cent of markets in the fourth quarter of 2014, according to the National Association of Realtors. Just 24 areas recorded lower median prices from a year earlier.
The accelerated price growth was fuelled by rising demand from buyers.
demand fueled by lower interest rates and a stronger job market, according to the latest quarterly report by the National Association of Realtors®.
Affordability improved in the final three months of 2014, thanks to lower interest rates, rising family income (up to a median of $65,782) and a strong job market. Indeed, to purchase a single-family home at the national median price, a buyer making a 5 percent downpayment would need an income of $45,863, a 10 percent downpayment would require an income of $43,449, and $38,621 would be needed for a 20 percent downpayment.
As a result, total existing-home sales, including single family and condo, declined 1 per cent quarter-on-quarter to an annual rate of 5.07 million, but climbed 2.6 per cent year-on-year. On TheMoveChannel.com, the USA remained the most popular property destination for the second month in a row in December 2014, accounting for one in 10 of all enquiries (9.3 per cent).
Supply, though, declined in the final months of 2014, with 1.85 million existing homes available for sale, slightly below the 2.01 million homes for sale during the fourth quarter of 2013.
This imbalance between supply and demand pushed up prices: the national median existing single-family home price in the fourth quarter was $208,700, up 6 per cent from the fourth quarter of 2013 - a higher rate of growth then the 4.8 per cent annual growth recorded in the third quarter.
There were more rising markets in the fourth quarter compared to the third quarter, when price increases were recorded in 73 per cent of metro areas. Twenty-four areas in the fourth quarter (14 per cent) had double-digit increases – a rise from 16 metro areas in the third quarter of 2014.
Lawrence Yun, NAR chief economist, comments: "Home prices in metro areas throughout the country continue to show solid price growth, up 25 per cent over the past three years on average," he said.
"This is good news for current homeowners but remains a challenge for buyers who are seeing home prices continue to outpace their wages. Low interest rates helped preserve affordability last quarter, but it’ll take stronger income gains and more housing supply to help meet the pent-up demand for buying."
"Despite affordable housing conditions in most of the country, an upward pressure on home prices still persists in some metro areas – particularly in the West – where the current supply of new and existing-homes for sale is failing to keep pace with overall demand and growing populations," adds Yun.
"Unless homebuilders significantly boost construction, housing supply shortages could develop and lead to further price acceleration this spring."
The most expensive housing market in the fourth quarter was the San Jose, California, metro area, where the median existing single-family price was $855,000. The lowest-cost area was Youngstown-Warren-Boardman, Ohio, where the median single-family home price was $78,000.