Median home prices in US metropolitan area median home prices increased by 7.6% in the third quarter of 2012 compared with the same quarter a year ago.
The latest quarterly statistics from the National Association of Realtors shows that the median price for single family home was $186,100 compared to $173,000 in the third quarter of 2011, the strongest year on year price increase since the first quarter of 2006 when the median price rose 9.4%.
The median price is where half of the homes sold for more and half sold for less. Medians are more typical than average prices, which are skewed higher by a relatively small share of upper end transactions.
The median existing single family home price rose in 120 out of 149 metropolitan statistical areas based on closings in the third quarter compared with same quarter in 2011, while 29 areas had price declines. In the second quarter 110 areas showed increases from a year earlier, while in the third quarter of 2011 only 39 metros were up.
NAR chief economist Lawrence Yun said the growth in home prices gets down to supply and demand.
‘Housing inventories have been gradually trending down from a record set in the summer of 2007. Earlier this year, a broad equilibrium began to develop in most areas between home buyers and sellers, which led to a sustained upturn in home prices,’ he explained.
‘We expect fairly normal appreciation patterns in 2013, but there is a risk of price acceleration if builders are unable to increase supply to meet the needs of our growing population and household formation,’ he added.
Total existing home sales, including single family and condos, rose 3.2% to a seasonally adjusted annual rate of 4.68 million in the third quarter from 4.54 million in the second quarter, and were 10.3% higher than the 4.25 million pace during the third quarter of 2011.
At the end of the third quarter 2.32 million existing homes were available for sale, which is 20% below the close of the third quarter of 2011 when 2.9 million homes were on the market.
NAR President Moe Veissi, said affordability conditions are a big factor in rising sales.
‘Historically low mortgage interest rates are encouraging many buyers who were on the sidelines. Sales this year are notably higher than the levels seen in 2008 through 2011, so we’re clearly in a recovery phase with rising sales, declining inventory and rising prices,’ he explained.
‘Of course the recovery would be stronger and more stable if we could return to safe but sensible mortgage underwriting standards,’ he added.
The national median existing condo price was $180,800 in the third quarter, up 7.7% from the third quarter of 2011. Some 33 metros showed increases in their median condo price from a year ago and 21 areas had declines.
First time buyers purchased 32% of all homes in the third quarter, down from 34% in the second quarter and the same as the third quarter of 2011.
The share of all cash home purchases was 27% in the third quarter, down from 29% in the second quarter and 29% in the third quarter of 2011. Investors, who make up the bulk of cash purchasers and compete with first time buyers, accounted for 17% of all transactions in the third quarter, down from 19% in the second quarter and 20% a year ago.
‘The modest decline in first time buyers and investors shows the impact of limited inventory in the lower price ranges from a shrinking share of distressed homes, which are popular with both of these groups,’ said Yun.