Good news for home sellers
Inventory levels remain tight, so home prices continue to rise in the third quarter, according to the National Association of Realtors (NAR). Especially challenging is the West region, where seven out of the 10 most expensive housing markets are located.
The price increases aren’t just a tiny slide, they’re up in 87 percent of measured markets, and while 12 percent did experience lower median prices compared to last year, 14 percent actually saw double-digit increases. Double. Digit.
The national median existing single-family home price in the third quarter was $240,900, up 5.2 percent for the year. Meanwhile, existing home sales fell 2.2 percent in the third quarter, down 0.4 percent compared to Q3 2015. Tight inventory = rising prices.
Bad news for home buyers
Dr. Lawrence Yun, NAR chief economist, says prospective buyers faced a very challenging market during the third quarter. “Mortgage rates around historical lows and solid local job creation created a winning formula for sustained homebuying demand all summer long,” he said.
“Unfortunately for house hunters in several of the top job producing metro areas around the country, deficient supply levels limited their options and drove prices higher – especially in markets in the West and South,” Dr. Yun added.
What is the answer?
If inventory conditions hamper affordability conditions, while mortgage rates that are low now potentially rising, what is the answer?
“If mortgage rates start to rise heading into next year, prospective buyers could face weakening affordability conditions in their market unless supply dramatically improves,” added Yun.
[clickToTweet tweet=”If homebuilders don’t ramp up production, housing affordability will diminish even more… ” quote=”“That’s why it’s absolutely imperative that homebuilders ramp up the production of more single-family homes to meet demand and slow price growth,” concludes Dr. Yun.”]
Home prices rose the most out West
Existing-home sales in the Northeast dropped 7.5 percent in the third quarter and are now 1.9 percent below the third quarter of 2015. The median existing single-family home price in the Northeast was $272,600 in the third quarter, up 1.2 percent from a year ago.
In the Midwest, existing-home sales decreased 4.2 percent in the third quarter but are 1.0 percent above a year ago. The median existing single-family home price in the Midwest increased 5.6 percent to $191,200 in the third quarter from the same quarter a year ago.
Existing-home sales in the South declined 2.7 percent in the third quarter and are 0.9 percent lower than the third quarter of 2015. The median existing single-family home price in the South was $213,700 in the third quarter, 6.5 percent above a year earlier.
In the West, existing-home sales increased 4.6 percent in the third quarter and are unchanged from a year ago. The median existing single-family home price in the West increased 7.6 percent to $349,200 in the third quarter from the third quarter of 2015.