The National Association of Realtors reports that metro home prices set their strongest quarterly sales pace in exactly a decade during the first three months of 2017. And they should know.
According to the NAR, metro home prices have now accelerated for three consecutive quarters.
The national median existing single-family home price in the first quarter was $232,100, which is up 6.9 percent from the first quarter of 2016 ($217,200) and the fastest growth since the second quarter of 2015 (8.2 percent).
The median price during the fourth quarter of 2016 increased 5.9 percent from the fourth quarter of 2015.
Single-family home prices last quarter increased in 85 percent of measured markets, with 152 out of 178 metropolitan statistical areas1(MSAs) showing sales price gains in the first quarter compared with the first quarter of 2016. Twenty-five areas (14 percent) recorded lower median prices from a year earlier.
Lawrence Yun, NAR chief economist, says continual supply shortages ignited faster price appreciation across the country in the first quarter. “Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,” he said.
“Those able to successfully buy most likely had to outbid others – especially for those in the starter-home market – which in turn quickened price growth to the fastest quarterly pace in almost two years.”
Added Yun, “Several metro areas with the healthiest job gains in recent years continue to see a large upswing in buyer demand but lack the commensurate ramp up in new home construction. This is why many of these areas – in particular several parts of the South and West – are seeing unhealthy price appreciation that far exceeds incomes.”
Thirty metro areas in the first quarter (17 percent) experienced double-digit increases (unchanged from the fourth quarter of 2016). Overall, there were slightly fewer rising markets in the first quarter compared to the fourth quarter of 2016, when price gains were recorded in 89 percent of metro areas.
Total existing-home sales3, including single family and condos, climbed 1.4 percent to a seasonally adjusted annual rate of 5.62 million in the first quarter (highest since first quarter of 2007 at 5.66 million) from 5.55 million in the fourth quarter of 2016, and are 5.0 percent higher than the 5.36 million pace during the first quarter of 2016.
At the end of the first quarter, there were 1.83 million existing homes available for sale2, which was 6.6 percent below the 1.96 million homes for sale at the end of the first quarter in 2016. The average supply during the first quarter was 3.7 months – down from 4.2 months in the first quarter of last year.
None of this will make things any easier for first-time home buyers, that’s for sure.