The trend in firming home prices solidified in the second quarter with more metropolitan areas showing increases from a year ago, aided by a surge in home sales driven by the home buyer tax credit, according to the latest survey by the National Association of REALTORS®.
In the second quarter, 100 out of 155 metropolitan statistical areas (MSAs) had higher median existing single-family home prices in comparison with the second quarter of 2009, including 14 with double-digit increases; two were unchanged and 53 metros showed price declines. In the first quarter of this year 91 areas had higher prices, while only 26 MSAs experienced annual price gains in second quarter of 2009.
The national median existing single-family price was $176,900 in the second quarter, up 1.5 percent from $174,200 in the same period of 2009. The median is where half sold for more and half sold for less. Distressed homes accounted for 32 percent of second quarter sales, down from 36 percent a year ago.
Lawrence Yun, NAR chief economist, says the correction in home prices appears to have ended in 2009. “All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” he said. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market we don’t expect any consequential movement in home prices for the foreseeable future. Very low inventory of newly built homes also will help to support home values.”
Yun urged caution on interpreting price data. “The median price is influenced by the mix of homes that were sold and do not reflect pure appreciation or depreciation,” he says. “The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. Now as more normal, non-distressed home sales are occurring, the median price in many areas is showing higher values.”
Total state existing-home sales, including single-family and condo, rose 9.1 percent to a seasonally adjusted annual rate of 5.61 million in the second quarter from 5.14 million in the first quarter, and were 17.3 percent above the 4.78 million-unit pace in the second quarter of 2009.
Sales increased from the first quarter in 44 states and the District of Columbia; 47 states and D.C. had increases over year-ago sales levels.
NAR President Vicki Cox Golder says record low mortgage interest rates will help cushion a summer slowdown. “As expected, sales are slowing down now that the home buyer tax credit has expired, but record-low mortgage interest rates, along with stable and affordable home prices in most areas, provide opportunities for buyers who weren’t able to take advantage of the credit,” she said.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.91 percent in the second quarter, down from 5.00 percent in the first quarter; it was 5.03 percent in the second quarter of 2009.
“Job creation will give home buyers more confidence, but the market over the next few months is likely to be below what we would expect for the size of our growing population,” Golder says. “With improving bank balance sheets, credit restrictions should gradually improve.”
In the condo sector, metro area condominium and cooperative prices – covering changes in 55 metro areas – showed the national median existing-condo price was relatively flat at $175,700 in the second quarter, down 0.5 percent from the second quarter of 2009. Twenty-six metros showed increases in the median condo price from a year ago and 29 areas had declines; the first quarter of 2010 showed 24 metros up, while only four metros saw annual price gains in second quarter of 2009.
- Northeast: Regionally, the median existing single-family home price in the Northeast declined 3.2 percent to $238,000 in the second quarter from a year earlier. Existing-home sales in the Northeast jumped 14.9 percent in the second quarter to a level of 980,000 and are 23.6 percent above the second quarter of 2009.
- Midwest: In the Midwest, the median existing single-family home price increased 1.4 percent to $148,500 in the second quarter from the second quarter of last year. Existing-home sales in the Midwest rose 14.5 percent in the second quarter to a pace of 1.30 million and are 20.9 percent above the same period in 2009.
- South: In the South, the median existing single-family home price slipped 2.0 percent to $155,500 in the second quarter from the second quarter of 2009. Existing-home sales in the South increased 10.9 percent in the second quarter to an annual rate of 2.10 million and are 18.8 percent above a year ago.
- West: The median existing single-family home price in the West rose 2.6 percent to $219,700 in the second quarter from a year ago. Existing-home sales in the West fell 2.6 percent in the second quarter to an annual rate of 1.23 million but are 7.6 percent higher than the second quarter of 2009.