The median price of a single family home in the U.S. rose to $186,100 in the third quarter of 2012, 7.6 percent over the median price of $173,000 one year earlier. According to the National Association of Realtors® (NAR) this was the strongest year-over-year price increase since the first quarter of 2006 when the median price rose 9.4 percent and follows a strong bump of 7.2 percent in the second quarter of 2012.
The increases in home prices are also
growing more broad-based. In the second
quarter 110 of the 149 metropolitan statistical areas (MSAs) covered by NAR had
increases, in the third quarter increases were seen in 120 MSAs and three of
the four regions.
Median prices for condominiums and
cooperatives in the 54 MSAs covered by that portion of the NAR survey rose 7.7
percent on an annual basis to $180,800.
Thirty-three of the areas had increases and 21 declines.
Yun, NAR chief economist, 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," he said. "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. 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 households."
said some of the price gain resulted from a smaller share of distressed home
the market, but the higher prices significantly reflect a market
recovery. Distressed homes - foreclosures and short sales which generally
sell at deep discounts - accounted for 23 percent of second quarter sales, down
from 30 percent a year ago.
existing-home sales, including single-family homes and condos, rose 3.2 percent
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 percent higher than the 4.25
million pace during the third quarter of 2011.
the end of the third quarter 2.32 million existing homes were available for
sale, which is 20.0 percent below the close of the third quarter of 2011 when
2.90 million homes were on the market.
presented a separate analysis that shows that, assuming an interest rate of 4
percent and that 25 percent of gross income would be devoted to principal and
income payments, the typical home buyer had more than enough income to purchase
a median priced single family home in most MSAs. The national median family income was $61,700
in the third quarter and to purchase a home at the national median price with 5
percent down would require an income of only $40,900 and with 20 percent down,
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," he said. "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. Of course the recovery would be stronger and more stable if we
could return to safe but sensible mortgage underwriting standards."
buyers purchased 32 percent of all homes in the third quarter, down from 34
percent in the second quarter and 32 percent in the third quarter of 2011. Investors accounted for 17 percent of sales
compared to 19 percent in the second quarter and 20 percent a year
earlier. All-cash sales made up 27
percent of home sale transactions, down from 29 percent in both the second
quarter and the third quarter of 2011.
All cash transactions, which are usually investor-related accounted for
17 percent of sales compared to 19 percent and 20 percent in the two earlier
"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," Yun explained.
Northeast was the only region where home prices slipped, down 0.3 percent on an
annual basis to $246,900. Sales of
existing homes, however, rose 1.7 percent in the third quarter and are 9.8
percent above sales one year earlier.
the Midwest, existing-home sales rose 5.2 percent in the third quarter and are
17.8 percent higher than in the third quarter of 2011. The median existing single-family home price
in the Midwest increased 4.2 percent to $151,100 in the third quarter from the
same quarter in 2011.
the South sales rose 5.4 percent quarter-over-quarter and are 11.7 percent
higher than in the third quarter of 2011.
The median existing single-family home price rose 5.7 percent to
$165,400 in the third quarter from a year earlier.
slipped in the West by 1.2 percent from the previous quarter primarily because
of limited supplies but are 2.1 percent higher than a year ago. With the
tight inventory, the median existing single-family home price in the West
surged 20.2 percent to $247,400 in the third quarter from the third quarter of