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DAILY REAL ESTATE NEWS | FRIDAY, FEBRUARY 12, 2016
Home prices posted a strong growth in closing out the final quarter of 2015, despite a moderating pace of sales, according to a new quarterly report released by the National Association of REALTORSÂ® this week.
NAR reports that the median existing single-family home price rose in 81 percent â€“ or 145 out of 179 metro area â€“ of the markets tracked. Thirty metro areas â€“ or 17 percent â€“ posted double-digit price increases in the fourth quarter of 2015, which trumps the 12 percent of markets that saw double-digit increases in the fourth quarter of 2014.
â€œEven with slightly cooling demand, the unshakeable trend of inadequate supply in relation to the overall pool of prospective buyers inflicted upward pressure on home prices in several metro areas,â€ says Lawrence Yun, NARâ€™s chief economist. â€œAs a result, home ownership continues to be out of reach for a number of qualified buyers in the top job producing, but costliest, parts of the country â€“ especially on the West Coast and parts of the South.â€
Nationwide, the median existing single-family home price in the fourth quarter of 2015 was $222,700 â€“ which is up 6.9 percent year-over-year (prices averaged $208,400 in the fourth quarter of 2014).
Meanwhile, total existing-home sales dropped 5.4 percent to a seasonally adjusted annual rate of 5.18 million in the fourth quarter â€“ compared to 5.48 million in the third quarter. Existing-home sales still are 2.4 percent higher than the 5.06 million pace during the fourth quarter of 2014.
â€œWithout a significant ramp-up in new home construction and more home owners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead,â€ Yun says.
The uptick in home prices offset lower mortgage rates and a rise in the national family median income, and caused housing affordability to drop in the fourth quarter compared to year-over-year.
A home buyer making a 5 percent down payment on a median price single-family income would need an income of $49,535, NAR reports. A buyer making a 10 percent down payment would need an income of $46,928, and buyers making a 20 percent down payment would need to earn $41,714.
â€œRecent employment data is starting to show some pick-up in wage growth as the labor market edges near full employment,â€ says Yun. â€œWith price appreciation likely to continue at the same pace â€“ and even higher in some markets â€“ incomes need to rise even more to keep affordability conditions from declining further.â€
Source: National Association of REALTORSÂ®