Home prices ticked up in most metros during the first quarter

A majority of U.S. metro areas saw median home prices rise in the first three months of the year amid a combination of more sales and tight supply, according to a new report. 

The median existing single-family home price increased in 87 percent of measured markets, with 154 out of 178 metropolitan areas posting gains, according to the latest quarterly report by the National Association of Realtors, issued Monday.

{mosads}More markets saw price increases in the January–March period than in the final quarter of last year, where increases were recorded in 81 percent of metro areas.

There were 24 areas, or 13 percent, that recorded lower median prices from a year earlier.

“The solid run of sustained job creation and attractive mortgage rates below 4 percent spurred steady demand for home purchases in many local markets,” said Lawrence Yun, NAR chief economist.

“Unfortunately, sales were somewhat subdued by supply and demand imbalances and broadly rising prices above wage growth,” Yun said.

Housing industry experts are upbeat about the spring buying season with a strong labor market and low mortgage rates. 

But lack of housing inventory remains a persistent problem, and more homes on the market would fuel a stronger growth. 

At the end of the first quarter, there were 1.98 million existing homes available for sale, with average supply at 4.3 months, down from 4.6 months a year ago.

A six-month supply reflects a healthy job market.

The national median home price in the first quarter was $217,600, up 6.3 percent from the first quarter of 2015, when the median price was $204,700. 

There were 28 metro areas in the first quarter, or 16 percent, that had double-digit increases — a slight decrease from the 30 metro areas in the fourth quarter of 2015. 

Meanwhile, total existing-home sales rose 1.7 percent to a seasonally adjusted annual rate of 5.29 million in the first quarter from 5.20 million in the fourth quarter of last year. Sales are 4.8 percent higher than the 5.05 million pace during the first quarter of 2015.

The five most expensive housing markets in the first quarter were the San Jose, Calif., metro area, where the median existing single-family price was $970,000; San Francisco, $770,300; Honolulu, $721,400; Anaheim-Santa Ana, Calif., $713,700; and San Diego, $554,300.

The five lowest-cost metro areas in the first quarter were Cumberland, Md., $67,400; Youngstown-Warren-Boardman, Ohio, $77,500; Decatur, Ill., $83,300; Wichita Falls, Texas, $95,200; and Rockford, Ill., $95,800.

Regionally, existing-home sales in the Northeast decreased 4.1 percent from the end of last year while home prices rose 1.8 percent from a year ago.

In the Midwest, sales were unchanged but are 6.1 percent higher than a year ago. Home prices in the Midwest increased 7.3 percent to $167,900 in the first quarter from the same period a year ago.

Existing-home sales in the South rose 5.2 percent during the January–March period, while prices rose 5.8 percent above last year’s levels.

In the West, sales climbed 0.9 percent in the first quarter and are 2.1 percent above a year ago. Prices are up 7.1 percent to $315,900 in the first quarter from the same period of 2015.

Last week, a separate survey by the National Association of Home Builders said that markets in 119 of the approximately 340 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the first quarter, representing a year-over-year net gain of 45 markets.

The index’s nationwide score ticked up to .95, meaning that based on current permit, price and employment data, the nationwide average is running at 95 percent of normal economic and housing activity. Meanwhile, 86 percent of markets have shown an improvement year-over-year.

“Housing markets continue to recover gradually, edged along by a firming economy, solid job creation and low mortgage interest rates,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “We expect the housing sector to improve at a slow, but steady pace throughout the year.”