Home Prices Grow at Fastest Pace in Seven Years

Homernprices in the fourth quarter of 2012 showed a rate of annual appreciationrngreater than in any quarter since the end of 2005 the National Association of Realtors®rn(NAR) said today.  There were 133rnmetropolitan areas in which median prices rose during the quarter out of thern152 tracked by NAR.  Prices increase in 120rnareas in the third quarter and only 29 one year earlier.  Twenty-nine areas posted price declines inrnthe recent period.</p

Thernmedian price of an existing single-family home was $178,900 in the fourthrnquarter, up 10.0 percent from $162,600 in the fourth quarter of 2011. Thernannual increase in the third quarter was 8.8 percent.   In thernfourth quarter of 2005 the median price increase was 13.6 percent.  NAR uses median price, where half of thernhomes sold for more and half sold for less, because average prices can be skewedrnby a relatively small share of upper-end transactions.  The median price of a condo/cooperative wasrn$179,900, an increase of 12.2 percent since the fourth quarter of 2011.  Condo prices increased in 47 metro areas.</p

LawrencernYun, NAR chief economist, said all the conditions for strong price growth arernat play including increasing home sales, record low interest rates, and thernlowest inventory of unsold homes in 12 years. rn”Home sales are being fueled by a pent-up demand and job creation, alongrnwith still favorable affordability conditions and rents rising at faster rates,”rnYun said.  “Our population has been growing faster than overall housingrnstock, so supply and demand dynamics are very much at play.”  He addedrnthat more housing construction is needed to relieve some of the pressure in thernmarket and keep home prices from overheating.</p

Somernof the price increases arise from a smaller market share of lower priced homes.rn The share of foreclosures and shortrnsales, which usually sell at deep discounts, fell to 23 percent of sales in thernfourth quarter compared to 30 percent a year ago.</p

Fourthrnquarter existing-home sales rose 5.0 percent to a seasonally adjusted annualrnrate of 4.90 million in the fourth quarter from 4.66 million in the thirdrnquarter, and were 12.1 percent above the 4.37 million pace during the fourthrnquarter of 2011.  The last time there was a higher rate of existing homernsales was 4.95 million in the fourth quarter of 2009. </p

Thernunsold inventory of existing homes was at the lowest level since Januaryrn2001.  At the end of the fourth quarterrnthere were 1.82 million existing homes available for sale, which is 21.6rnpercent below the close of the fourth quarter of 2011 when 2.32 million homesrnwere on the market.  </p

NAR’srnnational annual Housing Affordability Index, established in 1970, rose to arnrecord high 193.5 in 2012 from 186.4 in 2011.  The index is calculated onrnthe relationship between median home price, median family income and averagerneffective mortgage interest rate.  Anrnindex of 100 is defined as the point where a median-income household hasrnexactly enough income to qualify for the purchase of a median-priced existingrnsingle-family home, assuming a 20 percent downpayment and 25 percent of grossrnincome devoted to mortgage principal and interest payments. .  Thernhigher the index, the stronger the household purchasing power. </p

 “The housing affordability index shows thatrnthe national median income of families was almost double the income needed tornbuy a median-priced home in 2012, so most buyers are able to stay well withinrntheir means,” Yun said.  Despite risingrnprices the index is expected to average 161 in 2013, which would be the thirdrnbest on record. </p

Existing-homernsales in the Northeast increased 2.2 percent in the fourth quarter and are 12.9rnpercent above the fourth quarter of 2011.  The median existingrnsingle-family home price in the Northeast rose on an annual basis by 0.7rnpercent to $228,400.</p

Midwestrnsales rose 5.6 percent in the fourth quarter and are 18.3 percent higher than arnyear ago.  The median existingrnsingle-family home price increased 9.2 percent to $143,800. </p

Salesrnin the South were up 5.0 percent from the third quarter and 13.2 percent from arnyear earlier.  The regional median homernprice was up 9.1 percent to $160,100. </p

ThernWest was impacted most by limited housing supplies and had the strongest pricernincrease, jumping 20.1 percent year-over-year to a median of $245,200.  Sales were up 5.9 percent from the thirdrnquarter and are 5.0 percent higher than a year ago. 

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