Lack of housing inventory continues to push prices
Available existing homes for sales dropped 7.2% in the first quarter.
Low inventory is stalling home sales while pushing up prices, according to the latest quarterly report from the National Association of Realtors.
The national median existing single-family home price in the first quarter was $245,500, up 5.7% from the first quarter of 2017 median price of $232,200. The median sales price during the fourth quarter of 2017 climbed 5.3% from the fourth quarter of 2016.
Single-family home prices also increased in 91% of measured markets, with 162 out of 178 metropolitan statistical areas showing sales price gains in the first quarter compared to a year ago. Nearly 30% of metro areas realized double-digit price increases, up from 15% in the fourth quarter of 2017.
“The worsening inventory crunch through the first three months of the year inflicted even more upward pressure on home prices in a majority of markets,” said Lawrence Yun, NAR chief economist, “Following the same trend over the last couple of years, a strengthening job market and income gains are not being met by meaningful sales gains because of unrelenting supply and affordability headwinds.”
Yun says that areas with strong job markets report that consumer frustration is rising. “Home shoppers are increasingly struggling to find an affordable property to buy, and the prevalence of multiple bids is pushing prices further out of reach.”
Total existing-home sales, including single-family and condos, decreased 1.5% to a seasonally adjusted annual rate of 5.51 million in the first quarter from 5.59 million in the fourth quarter of 2017, and are 1.7% lower than the 5.60 million pace during the first quarter of 2017.
At the end of the first quarter, there were 1.67 million existing homes available for sale, which was 7.2% below the 1.80 million homes for sale at the end of the first quarter in 2017, the NAR reported. The average supply during the first quarter was 3.5 months – down from 3.7 months in the first quarter of last year.
Although the national family median income rose to $74,779 in the first quarter, overall affordability decreased from a year ago because of rising mortgage rates and home prices.
To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $55,732 while a 10% down payment would require an income of $52,779, and $46,932 would be needed for a 20% down payment.
“Prospective buyers in many markets are realizing that buying a home is becoming more expensive in 2018,” said Yun. “Rapid price gains and the quick hike in mortgage rates are essentially eliminating any meaningful gains buyers may be seeing from the combination of improving wage growth and larger paychecks following this year’s tax cuts. It’s simple: homebuilders need to start constructing more single-family homes and condominiums to overcome the rampant supply shortages that are hampering affordability.”
The five most expensive housing markets in the first quarter were the San Jose, California metro area, where the median existing single-family price was $1,373,000; San Francisco-Oakland-Hayward, California, $917,000; Anaheim-Santa Ana-Irvine, California, $810,000; urban Honolulu, $775,500; and San Diego-Carlsbad, $610,000.
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