Headstrong is a rather interesting word,
but the National Association of Realtors® (NAR) chose it to describe the continuing
imbalance between supply and demand in the housing market. NAR blames this imbalance for slightly
tempering home sales as well as pushing continued robust price growth in the
second quarter of 2017.
NAR says the national median existing single-family home price in the
second quarter rose 6.2 percent from the same quarter in 2016, an increase from
$240,700 to $255,600. This is a slight
moderation from the 6.9 percent year-over-year price growth logged in the first
quarter of this year, but the most recent median price still set a new peak,
surpassing Q3 2016's median of $241,300. NAR says single-family home prices
increased compared to the same quarter of 2016 in 154 or 87 percent of the 178
metropolitan statistical areas it tracks.
Lawrence
Yun, NAR chief economist, says home prices in most metro areas continued their
fast ascent in the second quarter because supply remained at "pitiful" levels.
"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," he 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."
Added
Yun, "The glaring need for more new home construction is creating an affordability
crisis that needs to be addressed by policy officials and local governments. 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."
Twenty-three
or 13 percent of the metro areas had double digit price increases, another
slight moderation from the first quarter when there were 30 areas with such
gains. However, the 87 percent of
markets with increases in the second quarter was 2 percentage points more than rising
markets in the first quarter.
Existing home sales during the quarter were down slightly from Q1,
moving from a seasonally adjusted annual rate of 5.62 million to 5.57 million,
an 0.9 percent decline. Second quarter sales were still 1.6 percent higher than
in the same quarter of 2016.
Yun's "pitiful" supply of existing
homes numbered 1.96 million at the end of the second quarter, 7.1 percent fewer
than were for sale a year earlier. The
average supply during the second quarter was 4.2 months - down from 4.6 months a
year earlier.
Family income rose during the
quarter to a national median of $71,529, but NAR said this was not enough to
offset weaker affordability arising out of higher mortgage rates and home
prices. To purchase a single-family home
at the national median price, a buyer making a 5 percent down payment would
need an income of $56,169, a 10 percent down payment would require an income of
$53,213, and $47,300 would be needed for a 20 percent down payment.
"Mortgage rates have subsided in
recent months, which has only somewhat helped take away some of the sting
prospective buyers are experiencing with the deteriorating affordability
conditions in many areas," added Yun. "Household incomes may be rising and
giving consumers assurance that now is a good time to buy, but these severe
inventory shortages will likely continue to be a drag on sales potential the
second half of the year."
Four of the five most expensive
housing markets in the second quarter were in California. San Jose, was number one with a median price of
$1,183,400, followed by San Francisco at $950,000, and Anaheim-Santa Ana, at $788,000.
San Diego at $605,000 was just behind urban Honolulu's median of $760,600.
The five lowest-cost metro areas in
the second quarter were Youngstown, Ohio $87,000; Cumberland, Maryland,
$98,200; Decatur, Illinois, $107,400; and Binghamton and Elmira, New York, at
$109,000 and $111,600 respectively.
Condos and cooperative saw slightly
less appreciation than single-family homes. The national median existing-condo
price was $239,500 in the second quarter, up 5.4 percent from a year earlier ($227,200).
Eighty-seven percent of the 61 metro
areas tracked showed gains in their median condo price from a year ago.
Total existing-home sales in the
Northeast rose 1.3 percent in the second quarter and are 0.4 percent higher
year-over-year. The median existing
single-family home price in the Northeast was $282,300, a 3.2 percent annual
increase.
Sales in the Midwest increased 4.2
percent quarter-over-quarter, but are 0.5 percent lower than a year ago. The
median existing single-family home price increased 6.6 percent to $204,000 on
an annual basis.
The
South saw sales dip 3.0 percent in the second quarter but they remain 2.5
percent higher on an annual basis. The median existing single-family home price
was $229,400, up 6.7 percent.
There
was a 3.7 percent decline in quarter-over-quarter sales in the West, but the
pace was up 3.1 percent from the same quarter in 2016. Median single-family prices rose 7.5 percent
to $372,400.