Home Prices Grow in U.S.; Housing Affordability Suffers
Metro areas in the U.S. reported strong home price growth during the final quarter of 2013, while some markets are facing home affordability issues, according to the National Association of Realtors.
The median existing single-family home price increased in 73 percent of U.S. measured markets, with 119 of 164 metro area reporting price gains in the fourth quarter, compared to a year ago.
Forty-two areas had double-digit increases, two were unchanged and 43 had lower median prices.
Although home prices grew, there were fewer rising markets in the final quarter, compared to the third quarter when 88 percent of metro areas showed yearly price gains.
Rising home prices are good signs for the recovering market, but it is beginning to hamper housing affordability.
"The vast majority of homeowners have seen significant gains in equity over the past two years, which is helping the economy through increased consumer spending," Lawrence Yun, NAR chief economist, said in the report. "At the same time, home prices have been rising faster than incomes, while mortgage interest rates are above the record lows of a year ago."
The five most expensive housing markets in the fourth quarter were the San Jose, Calif., metro area, with a median existing single-family price of $775,000; San Francisco, $682,400; Honolulu, $670,800; Anaheim-Santa Ana, Calif., $666,300; and San Diego, with a median price of $476,800.
On the other hand, the five lowest-cost metro areas were Toledo, Ohio, with a median single-family price of $80,500; Rockford, Ill., $81,400; Cumberland, Md., at $89,500; Elmira, N.Y., $99,500; and South Bend, Ind., with a median price of $101,100.
The nation median existing single-family home price was $196,900 in the fourth quarter, a 10.1 percent increase from $178,900 from a year ago. The increase was less than the 12.5 percent yearly rise in the third quarter.
A report last week from CoreLogic showed
national home prices increased in December year-over-over for the 22nd consecutive month.
Tight housing supplies in many areas around the country are contributing to the double-digit price growth. At year-end there were 1.86 million existing homes available for sale
, slightly higher than a year prior.
In 2013, housing starts totaled 924,000, higher than the 2012 figure of 780,600. However, it was well below the historic average of 1.5 million units that typically are needed, NAR reports.
"Added housing supply will help moderate price growth this year, and should help to stem erosion in affordability, but mortgage interest rates are projected to rise above 5 percent by the end of the year," Mr. Yun said.
The total number of existing-home sales -- single-family and condo -- fell 7.8 percent to a seasonally adjusted annual rate of 4.94 million in the final quarter, from 5.36 million the previous quarter. They were, however, 0.8 percent higher than the 4.90 million sold in the fourth quarter of 2012. More from the report:
- Metro areas with the greatest housing affordability conditions in 2013 include Toledo, Ohio, with an index of 395.4; Rockford, Ill., at 374.5; Decatur, Ill., 343.7; Lansing-East Lansing, Mich., 331.4; and Springfield, Ill., at 327.8.
- In the condo sector, metro area condominium and cooperative prices - covering changes in 55 metro areas - showed the national median existing-condo price was $197,200 in the fourth quarter, up 10.7 percent from the fourth quarter of 2012. Forty-four metros showed increases in their median condo price from a year ago, one was unchanged and 10 areas had declines.
- Regionally, total existing-home sales in the Northeast declined 7.1 percent in the fourth quarter, but are 7.1 percent above the fourth quarter of 2012. The median existing single-family home price in the Northeast was $241,000 in the fourth quarter, up 5.5 percent to from a year ago.
- In the Midwest, existing-home sales fell 9.1 percent in the fourth quarter, but are 2.0 percent higher than a year ago. The median existing single-family home price in the Midwest increased 7.0 percent to $152,400 in the fourth quarter from the same quarter a year ago.
- Existing-home sales in the South declined 4.4 percent in the fourth quarter, but are 3.6 percent above the fourth quarter of 2012. The median existing single-family home price in the South was $173,000 in the fourth quarter, up 8.3 percent from a year earlier.
- In the West, existing-home sales dropped 12.7 percent in the fourth quarter, and are 8.1 percent below a year ago. With notable inventory restrictions, the median existing single-family home price in the West jumped 15.5 percent to $286,200 in the fourth quarter from the fourth quarter of 2012.