Home Prices Rise in 88% of U.S. Cities as Recovery Gains
(Corrects date of report in second paragraph.)
Prices for single-family homes climbed in almost 88 percent of U.S. cities in the fourth quarter as the housing recovery broadened.
The median sales price rose from a year earlier in 133 of 152 metropolitan areas measured, the National Association of Realtors said in a report yesterday. In the third quarter, 120 areas had gains.
An improving job market and low interest rates are driving up prices by fueling demand for a tightening supply of listings. The national median price for an existing single-family home was $178,900 in the fourth quarter, up 10 percent from the same period last year. That was the biggest gain since 2005, according to the Realtors group.
“Home sales are on a sustained uptrend,” Lawrence Yun, chief economist for the National Association of Realtors, said in the report. “Home sales are being fueled by a pent-up demand and job creation, along with still-favorable affordability conditions and rents rising at faster rates.”
At the end of the fourth quarter, 1.82 million previously owned homes were available for sale, 22 percent fewer than a year earlier, according to the Chicago-based Realtors group.
The best-performing metro area was Phoenix, where prices jumped 34 percent from a year earlier. Prices rose 31 percent in Detroit and 28 percent in San Francisco.
In Phoenix, the inventory of foreclosed homes and short sales, when lenders agree to sell for less than the mortgage balance, plunged 42 percent in December from a year earlier, said Michael Orr, director of the Center for Real Estate Theory and Practice at Arizona State University’s W.P. Carey School of Business.
“Foreclosures and short sales have gone down, eliminating the sources of many cheap homes,” Orr said in a Feb. 7 report. “So the more expensive types of transactions, like normal resales and new-home sales, went up. As a result, new-home construction, which was at rock bottom in 2011, also really came roaring back in 2012.”
Private-equity investors including Blackstone Group LP and Colony Capital LLC are helping to reduce inventory in Phoenix as they compete to buy low-cost foreclosures they plan to operate as rental properties.
Other areas hard-hit by the foreclosure crisis showed large price increases. Prices climbed 26 percent in Cape Coral, Florida; 22 percent in California’s Riverside and San Bernardino counties; and 20 percent in Las Vegas.
In the New York, Northern New Jersey and Long Island metropolitan area, prices increased 3.6 percent.
The Kingston, New York, area had the biggest decline in the Realtors group’s report, with the median selling price falling 7.9 percent in the quarter. It was followed by Kankakee, Illinois, with an 7 percent decrease, and Erie, Pennsylvania, with a 6.1 percent drop.
Prices in western states climbed 20 percent to a median $245,200, the biggest gain of any area, according to the Realtors group. Prices in northeastern states rose the least, up 0.7 percent to a median $228,400.
The Realtors group’s Housing Affordability Index averaged 193.5 in 2012, up from 186.4 in 2011 and the highest since record keeping began in 1970. The index is calculated on the relationship between median home price, median family income and average effective mortgage interest rates.
To contact the editor responsible for this story: Kara Wetzel at email@example.com