The U.S. median home price rose to $217,300 in the third quarter of 2014 as home prices continued their slow, steady rise in most U.S. metropolitan areas, the NATIONAL ASSOCIATION OF REALTORS® says.
That price is 4.9% higher than the median price NAR reported in the third quarter of 2013. The median price is where half the homes sell for more and half sell for less.
That’s a healthy price increase, says NAR Chief Economist Lawrence Yun. “Home-price gains returned to more normalized levels of low- to mid-single digit rate of appreciation in many metro markets as inventory levels steadily increased,” he said. “Moreover, there are a good number of local markets that are still remarkably affordable with median prices at or under $200,000.”
Most Home Markets Rising
The median existing single-family home price increased in 125 out of 172 metropolitan areas (73%). But the rate at which prices are rising in those metros has slowed. At this point last year, 54 metros recorded double-digit home price increases. In the third quarter of this year, only 16 metro areas recorded double-digit home price increases.
That’s good news for first-time homebuyers who struggle to save downpayments, pass stringent lending tests, and earn enough income to purchase a home.
NAR President Steve Brown says traditional buyers are now entering a more favorable market. “With inventory levels at a rate closer to supporting overall demand, bidding wars are occurring less — giving buyers more time to view homes and secure financing,” he said.
Compared to earlier in the year, many markets have fewer cash-rich investors bidding to buy homes, which reduces competition for entry-level homebuyers.
5 most expensive housing markets:
1. San Jose, Calif.: $860,000
2. San Francisco: $744,400
3. Anaheim-Santa Ana, Calif.: $697,000
4. Honolulu: $677,600
5. San Diego: $517,800
5 lowest-cost housing markets:
1. Youngstown-Warren-Boardman, Ohio: $84,500
2. Cumberland, Md.: $93,200
3. Rockford, Ill.: $98,100
4. Decatur, Ill.: $101,900
5. Toledo, Ohio: $107,000
Distressed Sales Down
The third quarter data also held good news for existing homeowners: Foreclosures and short sales are down. Distressed homeowners typically sell at a discount, which drives down the value of surrounding properties.
Only 9% of third quarter sales were foreclosures or short sales (where the owners sold for less than they owed on their mortgage). That’s down from 14% a year ago. “Distressed sales are becoming less prevalent in many parts of the country and will likely be in the low single-digits percentagewise at this time next year,” said Yun.
Little Change in Home Affordability
Slightly lower mortgage rates and an uptick in the national family median income ($65,562) kept affordability in the third quarter roughly in line with the second quarter.
How Much Income Do You Need to Buy the Median Single-Family Home?
|Downpayment||Income Needed to Buy $217,300 Home|
Existing-Home Price by Region
|Q3 Median Price||Price Change vs. 2013
Condo and Co-op Prices
Nationally, the median existing condo/co-op price rose to $211,000 in the third quarter, up 2.7% from the third quarter of 2013 ($205,500). Condo and co-op prices rose in 41 metro areas (67%) and fell in 20 metros, NAR says.