Connect with us

Hi, what are you looking for?

The American Genius Real EstateThe American Genius Real Estate

NAR Reports

Home sales surge in Q4, pushing prices up, threatening affordability

(REAL ESTATE NEWS) With home sales improving, we’re tempted to celebrate, but NAR says there’s a lingering caveat that could threaten future sales.

home sales affordability fha report

Good news, bad news

Home sales in the fourth quarter hit the highest pace of the year, pushing inventory levels to record lows while pushing up housing prices, according to the National Association of Realtors (NAR).

The study indicates that in more than half of the markets measured since 2005, sales prices are now at or above their previous peak level. For all of 2016, 87 percent of measured markets saw home prices rise, up from 2015 (86 percent) and 2014 (75 percent).

[clickToTweet tweet=”Home sales surge: GREAT news for homeowners’ home values, BAD news squeezed out buyers.” quote=”This is phenomenal news for homeowners sitting on appreciated properties, but bad news for potential homebuyers being squeezed out of the market by suffocating affordability conditions and limited availability.”]

Supply and demand

Lawrence Yun, NAR chief economist, says home-price gains showed little evidence of letting up through all of 2016. “Buyer interest stayed elevated in most areas thanks to mortgage rates under 4 percent for most of the year and the creation of 1.7 million new jobs edging the job market closer to full employment,” he said.

“At the same time,” he noted, “the inability for supply to catch up with this demand drove prices higher and continued to put a tight affordability squeeze on those trying to reach the market.”

Added Yun, “Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets. The exception for the most part is in the Northeast, where price growth is flatter because of healthier supply conditions.”

Advertisement. Scroll to continue reading.

Prices on the rise

The national median existing home price in Q4 rose 5.7 percent over the year to $235,000.

The year ended with 1.65 million existing homes available for sale, a remarkable 6.3 percent below the close of 2015, and the lowest level since NAR began tracking the supply of all housing types in 1999.

The average supply during the fourth quarter was 3.9 months – down from 4.6 months a year ago.

Regional breakdown

In the Northeast, sales rose 10.5 percent from the previous quarter and 6.4 percent over the year. The median home price fell 0.2 percent in the last year to $254,100.

Sales in the Midwest increased 2.3 percent in the fourth quarter, rising 8.8 percent above a year ago. The median home price rose 5.7 percent over Q4 2015 to $181,100.

In the South, sales increased 2.6 percent for the quarter, marking a 5.4 percent increase over the year. The median home price surged 7.9 percent in the last year to $210,500.

Sales in the West rose 1.6 percent from the previous quarter, and are 9.1 percent above a year ago. The median home price rose 7.8 percent in a year to $348,800.

Advertisement. Scroll to continue reading.

Affordability problems linger

In recent years, NAR has endlessly warned of the tightening affordability conditions that stand to squeeze some interested homebuyers out of the market.

Despite what they call a “meaningful increase in the national family median income ($70,831),” rising mortgage rates and home prices weakened affordability conditions compared to 2015.

The report notes: “To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $51,017, a 10 percent down payment would require an income of $48,332, and $42,962 would be needed for a 20 percent down payment.”

Yun concluded, “Even a pick-up in wage growth may be insufficient to compensate the impact of higher mortgage rates and home prices. Increased homebuilding will be crucial to alleviate supply shortages and stave off the affordability hit.”

Here’s to hoping homebuilders will be able to loosen this chokehold.


Advertisement. Scroll to continue reading.

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.


The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox.



Real Estate Associations

It's been a long time coming, but the call for mentorship in real estate has been realized thanks to the new NAR program. Here's...

Real Estate Technology

Real estate transactions are being targeted by cybercriminals. One company just got sued by customers for being hacked. Are you safeguarding your company and...

National Association of Realtors

Realtor safety is of upmost importance to those in the field, especially to those at NAR. Here's how they're helping to save lives.


With interest rates skyrocketing, the housing market is cooling, but still some are moving to specific areas due to affordability, but where?

The American Genius' real estate section is honest, up to the minute real estate industry news crafted for industry practitioners - we cut through the pay-to-play news fluff to bring you what's happening behind closed doors, what's meaningful to your practice, and what to expect in the future. We're your competitive advantage. The American Genius, LLC Copyright © 2005-2022