NAR: Home-Price Slowdown Shows 'Healthier' Market
August 12, 2014
Though the growth in national median home prices slowed in the second quarter of this year, it's a sign that the market is returning to more sustainable levels, according to the latest quarterly report by the National Association of REALTORS®.
Out of 173 metropolitan areas surveyed, 71 percent showed increases in the median price of existing single-family homes, down from 74 percent in the first quarter. Twenty-seven percent of metro markets reported lower median prices in the second quarter.
Home Prices Soar
Only 19 areas saw double-digit increases in price, a significant drop from the 37 areas that experienced the same in the first quarter.
The slowdown in home-price appreciation should ultimately benefit buyers and sellers, says Lawrence Yun, NAR's chief economist.
“At this slower but healthier rate, home owners can continue steadily building equity,” Yun says. “Meanwhile, for buyers, increased supply with moderate price gains is giving them better opportunities to choose.”
Despite the price stabilization and overall increase in supply, some markets — especially those on the West Coast, where California alone claims four of the five most expensive housing markets in the country — are still experiencing sharp price increases due to inventory shortages.
“New construction for ownership housing and rentals is needed to alleviate price and rent pressures and accommodate their growing populations,” Yun said.
The national median price for an existing single-family home was $212,400 in the second quarter, compared to $203,400 during the same time last year. For existing condos, the national median price in the 62 areas surveyed was $211,100 in the second quarter, a 5.9 percent increase from a year ago.
Four California metros — San Jose, San Francisco, Anaheim-Santa Ana, and San Diego — as well as Honolulu reported the highest existing single-family home prices, with a median of $899,500. In the five lowest-cost metro areas — Youngstown-Warren-Boardman, Ohio; Elmira, N.Y.; Rockford, Ill.; Decatur, Ill.; and Toledo, Ohio — the median home price was $78,600.
In the second quarter of 2014, 2.30 million existing homes were available for sale, up by 6.5 percent compared to the second quarter of 2013.
NAR President Steve Brown says REALTORS® are reporting faster sales in the second quarter of 2014 than in the first quarter, even with the increase in supply.
“The improving economy and lower interest rates are increasing the pool of interested buyers,” he says.
However, Brown says that despite an improving economy, competition among buyers is still tight and all-cash offers are still common.
“This inevitably is causing hesitation for some first-time buyers, who are more likely to have lower down payments and need to secure financing amidst tight credit conditions,” Brown says.
Updated: June 05, 2020