Home prices improved year-over-year in the vast majority of U.S. metros last quarter as low supply volumes clashed with higher demand in a number of markets.
The national median price for existing single-family homes in the fourth quarter of 2014 was $208,700, up 6.0 percent from the same quarter in 2013, according to a report released Wednesday by the National Association of Realtors (NAR). That was better than the third quarter, which saw 4.8 percent annual growth.
"Home prices in metro areas throughout the country continue to show solid price growth, up 25 percent over the past three years on average," said NAR Chief Economist Lawrence Yun. "This is good news for current homeowners but remains a challenge for buyers who are seeing home prices continue to outpace their wages."
While low interest rates have helped keep affordability from slipping too much as prices rise, Yun says stronger wage growth and an increased supply of for-sale homes would be more helpful for would-be buyers.
The group estimates that there were 1.85 million existing homes on the market, down from the 2.01 million available a year prior. Sales, meanwhile, came to a seasonally adjusted annual rate of 5.07 million, down from the third quarter but 2.6 percent higher than the pace in 2013's closing months.
The median existing single-family home price rose in 86 percent of measured markets last quarter compared to a year before, with 150 out of 175 metros showing gains. In the third quarter, only 73 percent of metros experienced annual growth.
Twenty-four areas (14 percent) posted double-digit returns annually, a rise from 16 in Q3.
The five most expensive housing markets last quarter were mostly in California, led by San Jose, where the median price for an existing, single-family home was $855,000. Other Golden State metros included on the list are San Francisco ($742,900), Anaheim-Santa Ana ($688,500), and San Diego ($493,100). Honolulu was the odd one out, taking the third place spot at $701,300.
"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," Yun said. "Unless homebuilders significantly boost construction, housing supply shortages could develop and lead to further price acceleration this spring."
Compared to Q4 2013, the Midwest and South both saw the biggest gains in home prices, with each region posting a 6.2 percent year-over-year increase. Prices were higher in the South, coming in at a median $183,500 compared to the Midwest's median $162,000.
Prices were up 4.8 percent in the West to a median $299,500 and 2.2 percent in the Northeast to a median $246,300, NAR reported.