Home price growth backed down across the country in the second quarter, bringing national year-over-year appreciation to its slowest pace since the start of the housing recovery.
According to a quarterly report from the National Association of Realtors, median existing single-family home prices increased in 71 percent of measured markets last quarter, with 122 out of 173 metropolitan statistical areas posting annual increases from Q2 2013. Nineteen of those areas reported double-digit increases.
Those numbers reflected a slowdown from the first quarter, when prices rose in 74 percent of metros, and 37 areas saw gains higher than 10 percent.
Nationally, NAR reported the median existing single-family home price across April, May, and June was $212,400, up 4.4 percent from a year ago. That rate of growth was about half the gain recorded in the first quarter.
NAR Chief Economist Lawrence Yun said the moderation in price gains is largely a positive sign, reflecting a return to a more balanced market between homebuyers and sellers. Prices first started to climb in the beginning of 2012, quickly accelerating to a pace most commentators had deemed unsustainable as inflation and wage growth lagged behind.
"At this slower but healthier rate, homeowners can continue steadily building equity," Yun said. "Meanwhile, for buyers, supply with moderate price gains is giving them better opportunities to choose."
Price growth was capped off in part thanks to continuing declines in distressed home sales, which made up 12 percent of second-quarter home transactions, NAR reported. Going forward, Yun added that the drop in distressed sales will also help diminish appraisal problems that have stalled some home sales.
Also contributing to the moderation in price growth was a "much-needed" improvement in total existing-home stock, which came to 2.30 million at the end of the quarter. At the current sales pace, NAR estimates the average supply during the quarter was about 5.6 months.
Still, some areas—such as the West, which led home price growth with an annual gain of 7.3 percent—remain starved for inventory.
"New construction for ownership housing and rentals is needed to alleviate price and rent pressures and accommodate their growing populations," Yun said.
Given the slowdown in price increases, the drop in mortgage rates compared to last year, and the slight rise in the national median household income (to $64,751), NAR says buying power improved in a majority of metros last quarter. According to the group, in order to purchase a single-family home at the median price, a buyer making a 20 percent down payment would need an income of $40,266, while a 5 percent down payment would require an income of $47,816.