Home prices are showing signs of slowing to a healthier pace, according to the National Association of REALTORS®’ latest quarterly housing report.
In fact, Lawrence Yun, NAR’s chief economist, says there’s no question the housing market in the third quarter had its best quarter in nearly a decade.
“The demand for buying picked up speed in many metro areas during the summer as more households entered the market, encouraged by favorable mortgage rates and improving local economies,” Yun says. “While price growth still teetered near or above unhealthy levels in some markets, the good news is that there was some moderation despite the stronger pace of sales.”
Nationwide, the existing single-family home price in the third quarter was $229,000, up 5.5 percent from the third quarter of 2014.
Meanwhile, existing-home sales, including single-family and condo sales, rose 3.4 percent to a seasonally adjusted annual rate of 5.48 million in the third quarter. Existing-home sales are 8.3 percent higher than a year ago, shows NAR’s report.
Sales had the potential to move higher last quarter given the drop in mortgage rates and favorable economic conditions, Yun says.
“Unfortunately, the lack of any meaningful gains in housing supply pushed prices in some areas above what some potential buyers, especially first-time buyers, are able to afford,” says Yun.
The median existing single-family home price rose in 87 percent of tracked markets, with 154 out of 178 metro areas showing gains, according to closings in the third quarter compared to a year ago. Only 24 areas, or 13 percent, of tracked areas recorded lower median prices from a year earlier.
“Many of the metro areas with the fastest price appreciation over the past year were in the South – particularly in Florida,” says Yun. “A combination of solid job gains, above average shares of vacation and foreign buyers and little new construction being added was behind these areas’ faster price growth.”
With inventory levels nationwide, 2.21 million existing homes were available were sale by the end of the third quarter, under the 2.28 million homes for sale at the end of the third quarter one year ago, NAR’s report shows. The average supply in the third quarter was 4.9 months, down from 5.5 months a year ago.
The pool of potential buyers still outweighs what’s available for sale in many markets this fall, says NAR’s 2015 President Chris Polychron.
“REALTORS® are still reporting that many homes are going under contract more quickly than what’s typical this time of year,” Polychron says. “While this is certainly beneficial to home owners looking to sell, some are still reluctant to list out of concerns they’ll have limited time and choices during their own home search.”