Median home price report
According to data from the quarterly report released by the National Association of Realtors (NAR), median existing single-family home prices, based on contract closings, “are firming in many metropolitan areas, while improving sales and declining inventory are creating more balanced conditions.”
The median existing single-family home price rose in half (74) of all 146 metropolitan statistical areas (MSAs) that NAR tracked in the first quarter, compared to the same quarter in 2011, while 2 MSAs saw no change and the remaining 72 saw price declines. NAR points out that in the last quarter of 2011, only 29 MSAs showed gains from the year prior, marking this first quarter as one of improvement.
Surprisingly, NAR observed that “a new breakout of income requirements on a metro basis shows most buyers have the necessary income to buy a home in their area, assuming a favorable credit rating.”
“Qualifying incomes are well below median incomes in most of the country, which means home buyers generally can stay well within their means,” said Dr. Lawrence Yun, NAR chief economist. “For example, a buyer in Indianapolis making a 10 percent downpayment would need an annual income of $24,0004 to purchase a median-priced home, while in Seattle it would be $55,300. For now, buyers are facing an extraordinarily advantageous situation if they can obtain a mortgage.”
Volatility in the price performance
Dr. Yun said there is some volatility in the price performance. “Home prices are more volatile than normal because of sudden upswings in buyer activity in some localities, and also are affected by the prevalence of distressed sales,” he said. “Home prices lag sales activity because the transactions were negotiated mostly in the previous quarter. Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future.”
Yun said a big part of the story is housing inventory. “We now have broad shortages of lower priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges. This is good news for many sellers who wish to list now, or for those waiting for prices to improve.”
Total home sales should rise 7 to 10 percent
Inventory levels are falling nationally, down to 2.37 million existing homes available for sale in the first quarter, down 21.8 percent from the first quarter of 2011, and much further below the 4.04 million in the summer of 2007.
The national median existing single-family home price was $158,100 in the first quarter, falling 0.4 percent below the first quarter of 2011. Distressed homes accounted for 32 percent of first quarter sales, down 6.0 percent over the year. Total closings rose 4.7 percent in the first quarter, and were 5.3 percent above the first quarter of 2011 when sales spiked. First time buyers purchased 33 percent of homes in the first quarter, and this share of purchase activity has been consistent for over a year now. All-cash buyers accounted for 32 percent of purchases in the first quarter, up 3.0 percent from the previous quarter, but up only 1.0 percent over the year.
“This is the highest first quarter sales pace since 2007,” Yun said. “With strong market fundamentals, total home sales this year should rise 7 to 10 percent.”
Closings varied according to region
Regionally, existing-home sales in the Northeast jumped 8.6 percent in the first quarter and are 6.6 percent above the first quarter of 2011. The median existing single-family home price in the Northeast declined 3.2 percent to $226,300 in the first quarter from a year ago.
In the Midwest, existing-home sales rose 5.5 percent in the first quarter and are 11.7 percent higher than a year ago. The median existing single-family home price in the Midwest increased 0.8 percent to $125,300 in the first quarter from the same quarter in 2011.
Existing-home sales in the South increased 2.1 percent in the first quarter and are 4.1 percent above the first quarter in 2011. The median existing single-family home price in the South rose 1.2 percent to $143,600 in the first quarter from a year earlier.
Existing-home sales in the West rose 5.9 percent in the first quarter and are 1.4 percent higher than a year ago. The median existing single-family home price in the West slipped 0.9 percent to $196,200 in the first quarter from the first quarter of 2011.
Sellers on an even footing
NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said there are more opportunities in today’s market. “Historically favorable housing affordability conditions are making it easier for buyers to enter the market despite the unnecessarily tight credit conditions,” he said.
“Housing supply and demand are roughly balanced with overall housing supply at the lowest level in six years, putting sellers on an even footing with buyers in most markets.”