Median prices for existing homes in metropolitan areas continued to climb in the third quarter of 2015, but at a healthier pace that could entice more home buyers into the market, according to a report on Thursday by the National Association of Realtors®.
The report suggests an “encouraging lift-off” in existing-home sales, despite the low supply of available dwellings. Slower overall price appreciation is contributing to the rosier outlook.
The median price for an existing single-family home in the third quarter rose in 87% of the metropolitan statistical areas surveyed by NAR, compared with the same period last year. That’s a dip from the second quarter’s more robust 93% gain.
In all, 154 out of 178 metro areas saw year-over-year price gains in the third quarter; 24 areas posted lower median prices. The national median price for an existing single-family home was $229,000 in the third quarter, up 5.5% from the same quarter last year. (The second quarter saw an 8.2% year-over-year increase.)
According to NAR’s chief economist, Lawrence Yun, this translates to a housing market that had its best quarter in nearly a decade.
“The demand for buying picked up speed in many metro areas during the summer as more households entered the market, encouraged by favorable mortgage rates and improving local economies,” he said. “While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales.”
Jonathan Smoke, chief economist of realtor.com®, echoed the sentiment. And he sees even better days ahead.
“The fourth quarter will be stronger than the third,” Smoke said, “because overall metrics for this quarter point to more robust growth than in the second quarter. And [mortgage] rates are rising again, which should encourage any fence-sitters to act before they go up much more.”
This summer’s buying was fueled by pent-up demand by homeowners tired of their current digs, favorable rates, good prices, and better incomes, Smoke said.
Sales of existing homes, including condos and single-family dwellings, jumped 3.4% to a seasonally adjusted annual rate of 5.48 million in the third quarter compared with the second quarter—but up 8.3% from the third quarter of 2014.
In fact, the third quarter could have been even stronger, Yun suggested, because of declining mortgage rates and better economic conditions. But a lack of homes for sale remained a problem.
“Unfortunately, the lack of any meaningful gains in housing supply pushed prices in some areas above what some potential buyers—especially first–time buyers—are able to afford,” Yun said.
At the end of the third quarter of 2015, there were 2.21 million existing homes available for sale, down from the 2.28 million in the third quarter of 2014.
The hottest housing markets can be found in the South and the West, where population and job prospects are growing fastest, Smoke said. He noted that economic and population growth is igniting substantial demand in emerging hot markets in Raleigh, NC, and Nashville, TN.
Please, Mr. Postman
Meanwhile, the five most expensive markets were again out West. The San Jose, CA, area posted the highest median price for an existing home: a throat-lumping $965,000. San Francisco’s median price was $809,400, followed by the Anaheim-Santa Ana metro area in Southern California, which posted a median price of $715,300. In Honolulu, HI, the median price was $714,000, and in San Diego, CA, it was $554,400.
Head to Cumberland, MD, if you’re looking for the lowest median price: $82,400.
Here’s a regional breakdown of the year-over-year gains for the third quarter of 2015:
Sales of existing homes rose 6.4% in the Northeast, with the median price at $269,400, up 3.5%.
In the Midwest, sales rose 2.1%, with the median price increasing 4.8% to $181,100.
The South posted a 3.0% rise, with the median price at $200,700.
In the West, existing-home sales jumped by 3.9%, with the median price at $324,300— a 7.3% rise.
