Home prices continued to increase as
broadly if not as rapidly as in previous periods the
National Association of Realtors® (NAR) reported today. Median prices increased in the first quarter
of 2014 in 125 or 74 percent of the 170 metropolitan areas NAR tracks. In the first quarter of 2013 89 percent of
markets reported year-over-year gains.
national median existing single-family home price was $191,600 in the first
quarter, up 8.6 percent from $176,400 in the first quarter of 2013. In the
fourth quarter the median price rose 10.1 percent from a year earlier. Distressed
homes - foreclosures and short sales generally sold at discount -
accounted for 15 percent of first quarter sales, down from 23 percent a year
ago. In the condo sector, metro area condominium and cooperative prices -
covering changes in 59 metro areas - showed the national median existing-condo
price was $191,400 in the first quarter, up 10.8 percent from the first quarter
of 2013. Fifty metros showed increases in their median condo price from a year
ago, and nine areas had declines.
Yun, NAR chief economist, said the price trend is favorable. "The cooling rate
of price growth is needed to preserve favorable housing affordability
conditions in the future, but we still need more new-home construction to fully
alleviate the inventory shortages in much of the country," he said. "Limited
inventory is creating unsustainable and unhealthy price growth in some large
markets, notably on the West Coast."
were double digit price increases in 37 metro areas and seven had increases in
excess of 20 percent on an annual basis: South Bend-Mishawaka, Indiana (26.8
percent); Naples-Marco Island, Florida (26.6 percent); Las Vegas (23.5 percent);
Lansing, Michigan (23.4 percent); Atlanta-Marietta (23.3 percent);
Riverside-San Bernardino (23.1 percent); Sacramento (22.2 percent).
metro areas had annual decreases, some of them substantial. Among the largest were Cumberland, Maryland
(-18.6 percent); Springfield, Illinois (-15.1 percent); Florence, South
Carolina (-12.3 percent); and Oshkosh, Wisconsin (-11.0 percent).
The five most expensive housing markets in the first quarter were
the San Jose metro area, where the median existing single-family price was
$808,000; San Francisco, $679,800; Honolulu, $672,300; Anaheim-Santa Ana,
$669,800; and San Diego, where the median price was $483,000.
The five lowest-cost metro areas were Youngstown-Warren-Boardman,
Ohio, with a median single-family home price of $64,600 in the first quarter;
Decatur, Illinois, $69,600; Toledo, Ohio, $72,100; Rockford, Illinois, $73,100;
and Cumberland at $81,400.
Inventory increased slightly from a year earlier. There were 1.99 million existing homes for
sale at the end of the first quarter compared to 1.93 million in the first
quarter of 2013. The current inventory
is the equivalent of a 5.0 month supply compared to 4.6 months a year earlier. A supply of 6 to 7 months represents a rough
balance between buyers and sellers.
Total existing-home sales, including single-family and condo, fell
6.9 percent to a seasonally adjusted annual rate of 4.60 million in the first
quarter from 4.94 million in the fourth quarter, and were 6.6 percent below the
4.93 million level during the first quarter of 2013.
NAR President Steve Brown said
there's been some erosion in housing affordability.
"Both home prices and mortgage interest rates are higher than a year ago, but
the good news is that median income is enough to purchase a home in most areas.
There are good potential buying opportunities in areas where there has been
consistent local job creation, and where prices have not risen significantly,
or where they may be experiencing temporary declines," he said.
Brown also expressed
concern about the mortgage insurance fees for FHA loans that he said have more
than doubled since 2010 and may have priced 125,000 to 375,000 buyers out of
the market. "When you
combine the increases in home prices and interest rates with record-high premiums,
home purchases are becoming increasingly out of reach for many qualified
borrowers who rely on FHA financing."
Still, a separate NAR breakout of qualifying incomes to
purchase a median-priced existing single-family home on a metropolitan area basis
demonstrates sufficient buying power in the majority of metro areas. The
projections assume several downpayment percentage scenarios and assume 25
percent of gross income devoted to mortgage principal and interest at a
mortgage interest rate of 4.4 percent.
The national median family income was $64,500 in the
first quarter. However, to purchase a home at the national median price,
a buyer making a 5 percent downpayment would need an income of $44,200.
With a 10 percent downpayment the required income would be $41,800, while with
20 percent down, the necessary income is only $37,200.
Sales in the Midwest and Northeast were notably impacted by severe
winter weather, while limited inventory and reduced affordability affected the
existing-home sales in the Northeast fell 10.2 percent in the first quarter and
are 6.8 percent below the first quarter of 2013. The median existing
single-family home price in the Northeast was $239,300, up 2.2 percent from a
the Midwest, existing-home sales dropped 11.5 percent in the first quarter and
are 10.5 percent below a year ago. The median existing single-family home price
in the Midwest increased 6.7 percent to $144,000 in the first quarter from the
same quarter a year ago.
sales in the South declined 3.6 percent in the first quarter and are 0.7
percent below the first quarter of 2013. The median existing single-family home
price in the South was $168,900 in the first quarter, up 7.7 percent from a
the West, existing-home sales fell 6.0 percent in the first quarter and are
12.4 percent below a year ago. The median existing single-family home price in
the West jumped 14.0 percent to $282,100 in the first quarter from the first
quarter of 2013.