On a national level, the third quarter of 2013 witnessed encouraging year-over-year price gains in metropolitan areas. According to the latest quarterly report issued by the National Association of Realtors (NAR), price gains reflected through 2013 represent the strongest annual growth the U.S. housing market has seen in approximately eight years. The average price of a single-family home increased in 88 percent of the markets that were included on the report. That is to say, 144 of the 163 metropolitan statistical areas demonstrated a propensity for gains based on closings in the third quarter. Perhaps even more encouraging, however, is the 33 percent that experienced double-digit increases.
Comparatively, price gains have trended in an upward direction for the better part of a year. The second quarter witnessed price gains in 87 percent of the included metro areas. The third quarter of last year saw 81 percent of available areas increase in price, but only 18 percent of markets rose by double-digit amounts.
According to Lawrence Yun, the chief economist for the National Association of Realtors (NAR), the current scenario makes it increasingly difficult for prospective owners to buy a home. “Rising prices and higher interest rates have taken a bite out of housing affordability. However, we have the ongoing situation of more buyers than sellers in the market, so lower sales will help to take the pressure off home price growth and allow them to rise slowly at a single-digit growth rate in 2014.”
While the rate of appreciation continues to undermine affordability, most prospective buyers are able to afford the acquisition of a house. However, their purchase is less likely to occur in pricier neighborhoods. The income requirements to buy a median-priced home do not favor populations in cities where prices are appreciating too fast. The following metros represent the five of the most expensive housing markets:
- San Jose, CA has a median existing single-family home price of $805,000
- San Francisco, CA has a median existing single-family home price of $705,000
- Honolulu, HI has a median existing single-family home price of $679,800
- Anaheim, CA has a median existing single-family home price of $670,700
- San Diego, CA has a median existing single-family home price of $485.000
The prices represented in these metros are a far cry from the national average. The national median existing single-family home price was $207,300 in the third quarter. This includes a 12.5 percent jump from the middle of last year. The increase in prices, on a national level, represents the strongest year-over-year increase since the end of 2005 when the bubble had yet to burst.
Distressed properties (foreclosures and short sales) made up 14 percent of the growth the market saw in the third quarter. As they are now harder to find, due largely in part to investor activity, distressed property sales dropped 24 percent from the year earlier.
Following the third quarter of this year, approximately 2.21 million existing homes were on the market. Conversely, this number was up from the previous year. The third quarter of 2012 saw 2.17 million homes for sale. However, with higher sales, the average supply during the quarter was 5.0 months, down from 5.9 months in the third quarter of 2012.