Home prices continued to report strong year-over-year price gains during the first quarter of 2014, however, the growth rate appears to be slowing for a majority of markets nationwide, according to the National Association of Realtors (NAR)
The median price for an existing single-family home increased in 74% of markets measured by NAR, with 125 out of 170 metros reporting gains based on closings during the first quarter.
Though a large majority of markets showed home price gains during the first quarter, 89% of markets were reporting year-over-year price increases in the first quarter of 2013.
Nationally, the average price for an existing single-family home was $191,600 in the first quarter. While this represents an 8.6% average price hike when compared to the same quarter for 2013, NAR notes that the previous quarter— fourth quarter of 2013—saw the average price rise 10.1% year-over-year.
Slower growth aside, the “cooling” price trend is favorable as it preserves housing affordability conditions in the future, however inventory shortages in much of the country remain an obstacle, said NAR Chief Economist Lawrence Yun.
“Limited inventory is creating unsustainable and unhealthy price growth in some large markets, notably on the West Coast,” Yun stated.
The West Coast played home to the five most expensive housing markets during the quarter, with San Jose, California leading the pack with a median existing single-family home price of $808,000.
San Francisco followed up second with an average home price of $676,800 for an existing single-family home, while Honolulu averaged $672,300.
Other California cities of Anaheim-Santa Ana and San Diego rounded out the top-5 most expensive metros with average prices for existing single-family homes of $669,800 ad $483,000, respectively.
The five lowest-cost metro areas were Youngstown-Warren-Boardman, Ohio ($64,600); Decatur, Illinois ($69,600); Toledo, Ohio ($72,100); Rockford, Illinois ($73,100) and Cumberland, Maryland ($81,400).
“Prices in smaller areas tend to be a bit more volatile, with changes in the share of distressed sales affecting comparisons,” stated Yun. “In such cases, looking at the annual prices for those areas help to put it into perspective.”
At the end of the first quarter, there were 1.99 million existing homes available for sale, 3.1% above the first quarter of 2013, when 1.93 million homes were on the market, according to NAR data.
Even with the slight uptick in available homes for sale, factors like rising home prices and mortgage rates—having risen from 3.50% in the first quarter of 2013 to an average of 4.36% in the first quarter of 2014—present headwinds to the future of home affordability.
“Both home prices and mortgage interest rates are higher than a year ago, but the good news is that median income is enough to purchase a home in most areas,” stated NAR President Steve Brown. “There are good potential buying opportunities in areas where prices have not risen significantly, or where they may be experiencing temporary declines.”
Written by Jason Oliva