The national median home price showed its strongest year-over-year gain in more than seven years last quarter, according to the latest quarterly report from the ""National Association of Realtors"":http://www.realtor.org/ (NAR).[IMAGE]
NAR's data shows the median price of an existing single-family home increased 12.2 percent year-over-year to $203,500--the largest annual improvement since Q4 2005. Prices were impacted positively by shrinking market share of lower-priced homes and distressed sales (which accounted for 17 percent of last quarter's sales, down from 26 percent in Q2 2012).
Prices also continued to benefit from tight inventory. According to the association, there were an estimated 2.19 million existing homes available at the end of the second quarter, down 7.6 percent year-over-year. The average supply throughout the quarter was 5.1 months compared with 6.4 months last year.
""Higher interest rates are now causing sales to level out, but the tight supply conditions look to be with us for the balance of the year in most of the country,"" said NAR chief economist Lawrence Yun. ""Supplies in the low 5-month range can be expected for the foreseeable future.""
He added that steady increases in new home construction will help relieve inventory shortage going into 2014, which should moderate price growth.[COLUMN_BREAK]
Out of the 163 metropolitan statistical areas (MSAs) measured in NAR's report, 142 (87 percent) showed median price gains based on closings. Fifty areas (31 percent) posted double-digit gains.
Out of the remaining 21 MSAs, 20 reported price declines, and one was essentially unchanged.
Despite the rise in prices, NAR reported potential buyers were generally still well-positioned to purchase a home last quarter. Using a series of set variables (25 percent of gross income devoted to mortgage principal and interest with a mortgage rate of 3.7 percent), the national median family income of $62,600 would easily qualify a buyer to purchase a median-priced home with a down payment between 5-20 percent, the group said.
At the same time, the association noted rising interest rates may have actually helped some buyers by making it easier to qualify for a loan.
""Refinancing activity has slowed down dramatically, yet banks have a lot of money and staffing resources, many of whom have less work,"" said NAR president Gary Thomas. ""Banks now have an incentive to increase loan origination, which means they may dial back overly restrictive mortgage lending standards that have been in place since the crash.""
Existing-home sales--including single-family and condo--rose 2.4 percent quarter-over-quarter to a seasonally adjusted annual rate of 5.06 million, the highest rate since Q2 2007. Year-over-year, sales were up 12.3 percent.
Regionally, sales in the Northeast were 9.1 percent above last year's second quarter, while the median price was up 6.9 percent to $257,900. In the Midwest, sales rose 14.6 percent, and prices were up 7.9 percent to $160,600. Existing-home sales were up 15.1 percent in the South, with the median price rising 11.0 percent to $180,700. Finally, the West saw sales rise 7.4 percent year-over-year, while the median price increased 18.2 percent to $277,500.