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Home Prices Grow at Fastest Pace in Seven Years
prices in the fourth quarter of 2012 showed a rate of annual appreciation
greater than in any quarter since the end of 2005 the National Association of Realtors®
(NAR) said today. There were 133
metropolitan areas in which median prices rose during the quarter out of the
152 tracked by NAR. Prices increase in 120
areas in the third quarter and only 29 one year earlier. Twenty-nine areas posted price declines in
the recent period.
median price of an existing single-family home was $178,900 in the fourth
quarter, up 10.0 percent from $162,600 in the fourth quarter of 2011. The
annual increase in the third quarter was 8.8 percent. In the
fourth quarter of 2005 the median price increase was 13.6 percent. NAR uses median price, where half of the
homes sold for more and half sold for less, because average prices can be skewed
by a relatively small share of upper-end transactions. The median price of a condo/cooperative was
$179,900, an increase of 12.2 percent since the fourth quarter of 2011. Condo prices increased in 47 metro areas.
Yun, NAR chief economist, said all the conditions for strong price growth are
at play including increasing home sales, record low interest rates, and the
lowest inventory of unsold homes in 12 years.
"Home sales are being fueled by a pent-up demand and job creation, along
with still favorable affordability conditions and rents rising at faster rates,"
Yun said. "Our population has been growing faster than overall housing
stock, so supply and demand dynamics are very much at play." He added
that more housing construction is needed to relieve some of the pressure in the
market and keep home prices from overheating.
of the price increases arise from a smaller market share of lower priced homes.
The share of foreclosures and short
sales, which usually sell at deep discounts, fell to 23 percent of sales in the
fourth quarter compared to 30 percent a year ago.
quarter existing-home sales rose 5.0 percent to a seasonally adjusted annual
rate of 4.90 million in the fourth quarter from 4.66 million in the third
quarter, and were 12.1 percent above the 4.37 million pace during the fourth
quarter of 2011. The last time there was a higher rate of existing home
sales was 4.95 million in the fourth quarter of 2009.
unsold inventory of existing homes was at the lowest level since January
2001. At the end of the fourth quarter
there were 1.82 million existing homes available for sale, which is 21.6
percent below the close of the fourth quarter of 2011 when 2.32 million homes
were on the market.
national annual Housing Affordability Index, established in 1970, rose to a
record high 193.5 in 2012 from 186.4 in 2011. The index is calculated on
the relationship between median home price, median family income and average
effective mortgage interest rate. An
index of 100 is defined as the point where a median-income household has
exactly enough income to qualify for the purchase of a median-priced existing
single-family home, assuming a 20 percent downpayment and 25 percent of gross
income devoted to mortgage principal and interest payments. . The
higher the index, the stronger the household purchasing power.
"The housing affordability index shows that
the national median income of families was almost double the income needed to
buy a median-priced home in 2012, so most buyers are able to stay well within
their means," Yun said. Despite rising
prices the index is expected to average 161 in 2013, which would be the third
best on record.
sales in the Northeast increased 2.2 percent in the fourth quarter and are 12.9
percent above the fourth quarter of 2011. The median existing
single-family home price in the Northeast rose on an annual basis by 0.7
percent to $228,400.
sales rose 5.6 percent in the fourth quarter and are 18.3 percent higher than a
year ago. The median existing
single-family home price increased 9.2 percent to $143,800.
in the South were up 5.0 percent from the third quarter and 13.2 percent from a
year earlier. The regional median home
price was up 9.1 percent to $160,100.
West was impacted most by limited housing supplies and had the strongest price
increase, jumping 20.1 percent year-over-year to a median of $245,200. Sales were up 5.9 percent from the third
quarter and are 5.0 percent higher than a year ago.
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