Stronger housing demand coupled with lagging inventory levels have caused home prices to accelerate in many metros — with some experiencing double-digit increases — during the first quarter of 2015, according to the latest quarterly report by the National Association of Realtors (NAR).
The median existing single-family home price increased in 85% of measured markets, with 148 out of 174 metropolitan statistical areas (MSAs) showing gains on closings in the first quarter of 2015 compared to the same period last year. Still, 25 areas (14%) recorded lower median prices from a year earlier, NAR reports.
“Sales activity to start the year was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market,” said Lawrence Yun, NAR chief economist, in a written statement. “However, stronger demand without increasing supply led to faster price growth in many markets.”
More than 50 metros in the first quarter (29%) experienced double-digit increases, a sharp increase from the 24 metro areas in the fourth quarter of 2014. In the first quarter last year, 37 metro areas (21%) experienced double-digit increases.
“Sales could soften slightly in some of these markets seeing sharp price appreciation unless housing supply markedly improves and tempers its unhealthy level of growth,” Yun said.
The national median existing single-family home price in the first quarter was $205,200, up 7.4% from the same period last year.
Not surprisingly, some areas proved to be more expensive than others. The San Jose, Calif., metro area topped the list of the most expensive housing markets in the first quarter with a median existing single-family home price of $900,000. Following that, in order of cost, were San Francisco ($748,300); Honolulu ($699,300); Anaheim-Santa Ana, Calif. ($685,700); and San Diego ($510,300).
On the other hand, the five lowest-cost metro areas in the first quarter were Youngstown-Warren-Boardman, Ohio, where the median single-family home price was $64,300; Cumberland, Md. ($71,600); Rockford, Ill. ($78,600); Decatur, Ill. ($82,200); and Toledo, Ohio ($83,800).
“Because of some volatility in smaller markets, it’s wise to look at the long-term trend for a direction on prices,” Yun noted.
To access the NAR quarterly report, click here.
Written by Emily Study