An uptick in home sales coupled scarce supply levels kept home prices on the rising path in the majority of metro areas during the first quarter of the year.
The National Association of Realtors' (NAR) latest quarterly report found that the median existing single-family home price increased in 87 percent of measured markets, or 154 out of 178 metros, in the first quarter compared to the first quarter of 2015. Only 24 areas, or 13 percent, saw home prices decrease.
According to the NAR, more markets experienced home price gains in the first quarter of this year compared to last quarter's gains in 81 percent of metro areas. Double-digit increases were observed in 28 metro areas (16 percent) in the first quarter, down from 30 areas in the fourth quarter of 2015 and 51 areas in the first quarter of 2015.
Lawrence Yun, NAR Chief Economist said, "The solid run of sustained job creation and attractive mortgage rates below 4 percent spurred steady demand for home purchases in many local markets. Unfortunately, sales were somewhat subdued by supply and demand imbalances and broadly rising prices above wage growth. As a result, the path to homeownership so far this year remains strenuous for a segment of prospective buyers in the most competitive areas."
NAR's five most expensive housing markets in the first quarter were the San Jose, California, metro area, where the median existing single-family price was $970,000; San Francisco, California, $770,300; Honolulu, Hawaii, $721,400; Anaheim-Santa Ana, California, $713,700; and San Diego, California, $554,300. Meanwhile, the five lowest-cost metro areas in the first quarter were Cumberland, Maryland, $67,400; Youngstown-Warren-Boardman, Ohio, $77,500; Decatur, Illinois, $83,300; Wichita Falls, Texas, $95,200, and Rockford, Illinois, $95,800.
The report showed that the national median existing single-family home price in the first quarter was $217,600, up 6.3 percent from the first quarter of 2015 when the median price was $204,700. Existing-home sales also rose 1.7 percent to an annual rate of 5.29 million in the first quarter from 5.20 million in the fourth quarter of 2015, and are 4.8 percent higher than the 5.05 million pace during the first quarter of 2015.
Inventory levels were at 4.3 months supply in the first quarter, down from 4.6 months a year ago, NAR reported. There were 1.98 million existing homes available for sale in the first quarter, which was below the 2.01 million homes for sale at the end of the first quarter in 2015.
"In spite of deficient supply levels, stock market volatility and the paltry economic growth seen so far this year, the housing market did show resilience and had its best first quarter of existing-sales since 2007 (5.66 million)," Yun stated. "The demand for buying is there, but unless the stock of new and existing-homes for sale increases significantly–especially in several markets in the West–the housing market will struggle to reach its full potential."
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