US home prices still rising but rate falls to 5% or below

Taylor Scott International News

Home prices in the United States showed continued growth in a majority of metropolitan areas in the third quarter, but all four major regions saw increases at or below 5% from a year ago. The data from the latest quarterly report by the National Association of Realtors (NAR) also shows that the median existing single family home price increased in 73% of measured markets, with 125 out of 172 metropolitan statistical areas (MSAs) showing gains based on closings in the third quarter compared with the third quarter of 2013. Some 47 areas recorded lower median prices from a year earlier but the number of rising markets in the third quarter was mostly unchanged from the second quarter, when price increases were recorded in 71% of metro areas. Sixteen areas had double digit increases in the third quarter of the year, a sharp decline from 54 areas in the third quarter of 2013. Nineteen areas experienced increases in the double digits in the second quarter of this year. According to Lawrence Yun, NAR chief economist, home prices in the third quarter continued to stabilise towards a healthier rate of growth. ‘Home price gains returned to more normalized levels of low to middle single digit rate of appreciation in many metro markets as inventory levels steadily increased,’ he said. ‘Moreover, there are a good number of local markets that are still remarkably affordable with median prices at or under $200,000,’ he added. The national median existing single family home price in the third quarter was $217,300, up 4.9% from the third quarter of 2013. The median price during the second quarter of 2014 increased 4.2% from a year earlier. Total existing home sales, including single family and condo, increased 5.2% to a seasonally adjusted annual rate of 5.12 million in the third quarter from 4.87 million in the second quarter, but are still 3.8% below the 5.32 million pace during the third quarter of 2013. ‘Given the improving labour market and historically low interest rates, more buyers are anticipated to enter the market next year,’ said Yun. The data also shows that total housing inventory continued to make strides at the end of the third quarter at 2.3 million existing homes available for sale, which is 6% higher than a year ago. The average supply during the third quarter was 5.4 months compared to five months in the third quarter of 2013. A supply of six to seven months represents a rough balance between buyers and sellers. NAR president Steve Brown said that traditional buyers are entering a more favourable market. ‘With inventory levels at a rate closer to supporting overall demand, bidding wars are occurring less, giving buyers more time to view homes and secure financing,’ he pointed out. ‘Additionally, Realtors across the country continue to report less investor activity and fewer all cash sales in their markets compared to earlier in the year,’ he added. Distressed homes, that is foreclosures and short sales generally sold at discount, accounted for 9% of… Continue reading →

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