Increasing the affordability of housing will be key to ensuring healthy, sustained growth of the industry according to the latest quarterly report released by the National Association of Realtors (NAR).
The report, which looks at metropolitan median area prices and affordability for Q4 2018 indicated that while inventory increased and metro market prices rose at a slower pace during the period total existing home sales decreased 1.8 percent to a seasonally adjusted 5.18 million in Q4 down from 5.2 million in Q3 2018. On a year over year basis, home sales fell 7.4 percent from 5.59 million during the same period in 2017.
Home prices for single-family homes increased in 92 percent of NAR's measured markets in Q4 with 163 of the 178 metros showing sales price gains in the fourth quarter compared to a year ago. However, the report indicated 14 metro areas experiencing double-digit increases, down from 18 in the third quarter.
“Home prices continued to rise in the vast majority of markets but with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace,” said Lawrence Yun, Chief Economist at NAR.
The inventory also increased during the quarter with 1.55 million existing homes available for sale compared with 1.46 million at the end of Q4 2017, showing an increase of 6.2 percent. The average supply during the quarter was four months, up from 3.5 months during the same period in 2017.
Despite these increases, Yun said that housing affordability would be the "key to sustained healthy growth in the housing market" in the near- to long-term. "Housing starts fell far short of historically normal levels, with only 9.6 million new housing units added in the past decade; compared to 15 to 16 million that would have been needed to meet our growing population and 20 million new job additions," Yun said.
Looking at the most and least expensive housing markets of the quarter, the report indicated that four of the five most expensive markets were in California with median existing single-family price ranging from $1.2 million to $626,000. The only non-California market on this list was Urban Honolulu, Hawaii, where median home prices stood at $812,900.
The five cheapest housing markets were Decatur, Illinois, $89,300; Youngstown-Warren-Boardman, Ohio, $97,200; Cumberland, Maryland, $109,100; Elmira, New York, $111,400; and Erie, Pennsylvania, $113,300.
Click here to read the full report.