Home Price Gains Ease But Still Strong in Most Metro Areas
August 14, 2002
WASHINGTON – Home price increases in most metropolitan areas rose faster than historic norms during the second quarter, although the annual rate of increase was less than in the first quarter, according to the latest survey by the National Association of Realtors®.
The association's second -quarter metro area home price report, covering changes in 113 metropolitan statistical areas,* shows 28 areas with double-digit annual increases in median existing-home prices and 10 areas posting generally small declines.
David Lereah, NAR's chief economist, said price patterns are following market demand. "It's a simple matter of supply and demand, and right now there are still more buyers than sellers in most housing markets," he said. "The fact that housing inventories remain on the lean side means home prices are rising faster than historic norms, but we expect that to improve during the second half of the year as the market comes into a closer balance between buyers and sellers."
The national median existing-home price was $157,700 during the second quarter, up 7.4 percent from the second quarter of 2001 when the median price was $146,800; the annual rate of increase in the first quarter was 8.1 percent. The median is the midpoint, which is a typical market price where half of the units sold for more and half sold for less.
NAR President Martin Edwards Jr. said the overall rate of price increase is expected to slow. "With record home sales and historically low levels of homes available for sale during the first quarter, there was a lot of pressure on home prices," he said. "We're starting to see an easing of that pressure, which is reducing the risk of localized price bubbles. I should add we've never seen a national price bubble and we expect price appreciation to return to normal patterns by next year, rising one or two points faster than the general rate of inflation." Edwards is a partner in Colliers Wilkinson & Snowden Inc., Memphis, Tenn.
The strongest increase was in Nassau-Suffolk, N. Y., with a median price of $307,200, up 29.6 percent from the second quarter of 2001. Next came the Bergen-Passaic area of New Jersey at $338,800, up 24.7 percent. Third was the New York City-Northern New Jersey-Long Island area, where the second quarter median price of $303,800 was 22.3 percent higher than a year earlier.
Median second quarter metro resale prices ranged from $83,800 in Topeka, Kan., to more than six times that amount in the San Francisco Bay area, where the median price was $540,500. The second most expensive area was Anaheim-Santa Ana (Orange Co., Calif.), with a second quarter median resale price of $411,100, followed by Boston at $397,700.
Other low-cost markets include Syracuse, N.Y., the second least-costly area at $84,700, and Buffalo-Niagara Falls, N.Y., with a second quarter typical resale home price of $85,600.
Regionally, the strongest increase was in the West where the median existing-home price of $218,700 was 12.6 percent above the second quarter of 2001. The highest increase in the region was in San Diego, with a median price of $361,900, up 21.3 percent from the second quarter of 2001. Los Angeles-Long Beach, with a second quarter median price of $276,600, rose 18.0 percent from a year earlier. Anaheim-Santa Ana rose 16.6 percent, while Sacramento, at $202,100, rose 15.8 percent. Tucson, Reno and San Francisco also experienced double-digit increases.
The median resale price in the Northeast during the second quarter was $160,300, a rise of 9.8 percent from a year earlier. After Nassau-Suffolk, Bergen-Passaic, and the New York City area, the strongest increase in the region was in Monmouth-Ocean, N.J., where the typical resale price was $242,700, up 21.0 percent from a year ago, followed by Providence, R.I., with a median price of $185,800, up 20.7 percent, and Middlesex -Somerset-Hunterdon, N.J., at $278,200, up 16.5 percent. Five other metros in the Northeast also show double-digit median price gains.
The second quarter median existing-home price in the South was $148,300, up 6.2 percent from a year ago. The strongest increase in the region was in Washington, D.C., where the second-quarter median price of $249,700 was up 20.8 percent from a year earlier. Next came Miami-Hialeah, at $186,800, up 17.0 percent, Wilmington, Del., with a median of $149,500, an increase of 14.5 percent, and Fort Lauderdale-Hollywood- Pompano Beach, Fla., at $195,400, up 13.5 percent. Three other metro areas in the South experienced double-digit price increases.
In the Midwest, the median resale home price of $132,700 during the second quarter was 5.6 percent higher than the same period in 2001. The strongest increase in the region was in Chicago, with a median price of $223,700, up 13.0 percent in the last year. The next highest increase was in Milwaukee, where the median price of $174,500 was 11.9 percent higher than the second quarter of 2001, followed by the Davenport-Moline-Rock Island area of Iowa and Illinois, at $193,800, up 8.4 percent.
The National Association of Realtors®, "The Voice for Real Estate," is America's largest trade association, representing more than 800,000 members involved in all aspects of the residential and commercial real estate industries.
*Areas are generally metropolitan statistical areas (MSAs) as defined by the U.S. Office of Management and Budget. They include the specified city or cities and surrounding suburban areas. Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas.
Tables of metropolitan area median prices, percent changes and historic data are available at http://www.realtor.org/research.
Source: NATIONAL ASSOCIATION OF REALTORS®