WASHINGTON—A “moderating pace” of sales had little impact on the trajectory of home prices during the final three months of the year, which picked up speed and showed continued growth in most of the U.S., according to the latest quarterly report by the National Association of Realtors.
The median existing single-family home price increased in 81% of measured markets, with 145 out of 179 metropolitan statistical areas (MSAs) showing gains based on closings in the fourth quarter compared with the fourth quarter of 2014, the NAR said. Thirty-four areas (19%) recorded lower median prices from a year earlier.
There were slightly fewer rising markets in the fourth quarter compared to the third quarter, when price gains were recorded in 87% of metro areas. Thirty metro areas in the fourth quarter (17%) experienced double-digit increases, a jump from the 20 metro areas in the third quarter. Twenty-two metro areas (12%) experienced double-digit increases in the fourth quarter of 2014.
For all of 2015, an average of 89% of measured metro areas saw increasing home prices, up from the averages in 2014 (83%) and 2013 (88%).
Lawrence Yun, NAR chief economist, said the faster price growth reawakened in the final months of 2015 despite the pace of sales slowing from earlier in the year.
"Even with slightly cooling demand, the unshakeable trend of inadequate supply in relation to the overall pool of prospective buyers inflicted upward pressure on home prices in several metro areas," he said. "As a result, homeownership continues to be out of reach for a number of qualified buyers in the top job producing, but costliest, parts of the country – especially on the West Coast and parts of the South."
The national median existing single-family home price in the fourth quarter was $222,700, up 6.9% from the fourth quarter of 2014 ($208,400). The median price during the third quarter of 2015 increased 5.4% from the third quarter of 2014.
Total existing-home sales, including single family and condo, declined 5.4% to a seasonally adjusted annual rate of 5.18 million in the fourth quarter from 5.48 million in the third quarter, but are 2.4% higher than the 5.06 million pace during the fourth quarter of 2014, according to the NAR.
"Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead," adds Yun.
The NAR said that home prices, despite lower mortgage rates and an increase in the national family median income ($68,034), caused affordability to fall in the fourth quarter compared to the fourth quarter of last year. To purchase a single-family home at the national median price, a buyer making a 5% down payment would need an income of $49,535, a 10% down payment would require an income of $46,928, and $41,714 would be needed for a 20% down payment.
"Recent employment data is starting to show some pick-up in wage growth as the labor market edges near full employment," adds Yun. "With price appreciation likely to continue at the same pace – and even higher in some markets – incomes need to rise even more to keep affordability conditions from declining further."
The five most expensive housing markets in the fourth quarter were the San Jose, Calif., metro area, where the median existing single-family price was $940,000; San Francisco, $781,600; Honolulu, $716,600; Anaheim-Santa Ana, Calif., $708,700; and San Diego, $546,800.
The five lowest-cost metro areas in the fourth quarter were Youngstown-Warren-Boardman, Ohio, $81,200; Cumberland, Md., $86,100; Rockford, Ill., $87,600; Decatur, Ill., $90,000; and Wichita Falls, Texas, $101,900.