The National Association of Realtors was out Thursday morning with its quarterly analysis of the housing market, and its conclusions mirror what was in the group’s monthly reports: Persistent supply shortages throughout the country led to slightly faster home price appreciation during the third quarter. The report also revealed that seven of the 10 most expensive housing markets in the U.S. are in the West, including San Jose, California, which had a median single-family home price of $1 million for the second straight quarter.
The median existing single-family home price increased in 87% of measured markets, with 155 of 178 metropolitan statistical areas (MSAs) showing gains based on closed sales in the third quarter compared with the third quarter of 2015. That was up from 83% in the second quarter. And prices in 25 of those metros were up by double-digit percentages. Only 22 areas (12%) recorded lower median prices from a year earlier.
Lawrence Yun, NAR chief economist, says prospective buyers faced a very challenging market during the third quarter. “Mortgage rates around historical lows and solid local job creation created a winning formula for sustained home buying demand all summer long,” said Lawrence Yun, the Realtors’ chief economist. “Unfortunately for house hunters in several of the top job producing metro areas around the country, deficient supply levels limited their options and drove prices higher – especially in markets in the West and South.”
The national median existing single-family home price in the third quarter was $240,900, up 5.2% from the third quarter of 2015 ($228,900) and surpasses this year’s second quarter ($240,700) as the current peak quarterly median sales price. The median price during the second quarter increased 4.9% from the second quarter of 2015.
Total existing-home sales, including single family and condos, slid 2.2% to a seasonally adjusted annual rate of 5.38 million in the third quarter from 5.50 million in the second quarter of this year, and were 0.4% lower than the 5.40 million pace during the third quarter of 2015.
“After climbing to their highest annual pace in over nine years in June, sales sputtered in the third quarter because inventory could not catch up with what was being quickly sold,” said Yun. “Only a decent rebound in September kept the monthly and annual sales declines from being even larger.”
At the end of the third quarter, there were 2.04 million existing homes available for sale, which was 6.8% below the 2.19 million homes for sale at the end of the third quarter in 2015. The average supply during the third quarter was 4.6 months – down from 4.9 months a year ago.
Despite faster price growth last quarter, the decline in mortgage rates and an uptick in the national family median income ($70,306)5 slightly improved affordability compared to a year ago. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $51,661, a 10% down payment would require an income of $48,942, and $43,504 would be needed for a 20% down payment.
“If mortgage rates start to rise heading into next year, prospective buyers could face weakening affordability conditions in their market unless supply dramatically improves,” added Yun. “That’s why it’s absolutely imperative that home builders ramp up the production of more single-family homes to meet demand and slow price growth.”
The five most expensive housing markets in the third quarter were the San Jose, California, metro area, where the median existing single-family price was $1,000,000; San Francisco, $835,400; urban Honolulu, $745,300; Anaheim-Santa Ana, California, $740,100; and San Diego, $589,300.
The five lowest-cost metro areas in the third quarter were Youngstown-Warren-Boardman, Ohio, $90,300; Cumberland, Maryland, $94,400; Decatur, Illinois, $99,400; Elmira, New York, $109,400; and Rockford, Illinois, $111,900.
Metro area condominium and cooperative prices – covering changes in 59 metro areas – showed the national median existing-condo price was $225,100 in the third quarter, up 4.6% from the third quarter of 2015 ($215,200). Forty-one metro areas (69%) showed gains in their median condo price from a year ago; 17 areas had declines.
Total existing-home sales in the Northeast dropped 7.5% in the third quarter and are now 1.9% below the third quarter of 2015. The median existing single-family home price in the Northeast was $272,600 in the third quarter, up 1.2% from a year ago.
In the Midwest, existing-home sales decreased 4.2% in the third quarter but are 1.0% above a year ago. The median existing single-family home price in the Midwest increased 5.6% to $191,200 in the third quarter from the same quarter a year ago.
Existing-home sales in the South declined 2.7% in the third quarter and are 0.9% lower than the third quarter of 2015. The median existing single-family home price in the South was $213,700 in the third quarter, 6.5% above a year earlier.
In the West, existing-home sales increased 4.6% in the third quarter and are unchanged from a year ago. The median existing single-family home price in the West increased 7.6% to $349,200 in the third quarter from the third quarter of 2015.
