According to the latest quarterly report by the National Association of Realtors (NAR), home prices have increased in the majority of metro areas included for Q1 2015. A high demand for housing along with low inventory levels caused prices to go up significantly and areas that experienced double-digit price appreciation doubled compared to last quarter.
After switching to positive growth levels at the end of 2014, prices began to go up in many metro areas, Lawrence Yun, NAR chief economist, says. "Sales could soften slightly in some of these markets seeing sharp price appreciation unless housing supply markedly improves and tempers its unhealthy level of growth,” Yun said.
The report found that the median single-family home price increased in 85 percent of measured markets. In metropolitan statistical areas (MSAs), compared with Q1 2014, 148 out of 174 areas increased based on the amount of closings in Q1 2015. Compared with last year's results, 25 areas (14 percent) recorded lower median prices.
With price increases occurring in 85 percent of metro areas, the amount of rising markets remained constant with Q4 2014, the report says. Double-digit increases occurred in 51 metro areas (29 percent) in Q1, more than double the amount from Q4 2014. Thirty-seven metro areas (21 percent) also experienced double-digit increases.
"Sales activity to start the year was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market," Yun said. "However, stronger demand without increasing supply led to faster price growth in many markets."
The report says that the national median existing single-family home price is up 7.4 percent from $191,100 in Q1 2014 to $205,200. Including single family and condo homes, the total for existing-home sales declined 1.8 percent to a seasonally adjusted annual rate of 4.97 million in Q1. There were 2 million existing homes for sale at the end of Q1. The average supply during the first quarter was 4.6 months. A supply of six to seven months means there is a good balance of supply between buyers and sellers.
"Homeowners throughout the country have enjoyed accumulating household wealth through the steady rise in home values in the past few years," Yun said. "However, some homeowners are hesitant to move-up and sell because they aren't confident they'll find another home to buy. This trend—in addition to subpar homebuilding activity—is leading to the ongoing inventory shortages and subsequent run-up in prices seen in many markets."
With home prices steadily rising all over the U.S., low interest rates are helping to keep prices low for new shoppers on the market, NAR President, Chris Polychron, says.
"Realtors are reporting increased foot traffic this spring as more consumers are feeling confident about their financial situation and looking to lock-in before rates eventually start to climb," Polychron said. "With supply remaining tight—especially at the entry-level price range—buyers will need the expertise and local market insight of a Realtor to help them through each intricate step of the buying process."
Total existing-home sales in the Northeast dropped 11.2 percent in the first quarter but still remained 2.2 percent above the first quarter of 2014.
In the Midwest, existing-home sales declined 2.0 percent in the first quarter but are 6.3 percent higher than a year ago.
Existing-home sales in the South fell slightly (0.5 percent) in the first quarter but are 7.8 percent above the first quarter of 2014.
To view the full report visit: Realtor.org