2nd-Quarter Metro Homes Prices Improve, Sales Down in Most States
Washington, DC - Home price trends are improving in metropolitan areas but existing-home sales during the second quarter were below a year ago in most states, according to the latest quarterly survey by the National Assn. of REALTORS.
In the second quarter, 97 out of 149 metropolitan statistical areas 1 show year-over-year increases in median existing single-family home prices, including nine areas with double-digit annual gains; 50 had price declines; and two were unchanged. In the first quarter of 2007, revised data shows 83 areas had annual price increases, while in the fourth quarter of 2006 only 68 areas were up.
Lawrence Yun, NAR senior economist, said the price trends are encouraging. “Although home prices are relatively flat, more metro areas are showing price gains with general improvement since bottoming-out in the fourth quarter of 2006,” he said. “Recent mortgage disruptions will hold back sales temporarily, but the fundamental momentum clearly suggests stabilizing price trends in many local markets.”
Total state existing-home sales, including single-family and condo, were at a seasonally adjusted annual rate2 of 5.91 million units in the second quarter, down 10.8 from a 6.63 million-unit pace in the second quarter of 2006. Six states showed increases in the sales pace from a year ago; one was unchanged and complete data for two states were not available.
The national median existing single-family home price was $223,800 in the second quarter, down 1.5% from the second quarter of 2006 when the median price was $227,100. The median is a typical market price where half of the homes sold for more and half sold for less, but there has been a downward skew in the national comparison because sales have declined in many high-cost areas and risen in some lower cost markets.
“Since all real estate is local, this report on metro area home prices is more meaningful than our monthly data on national prices because metro areas are less subject to price distortion that can result from geographic changes in the composition of sales,” Yun said.
NAR President Pat V. Combs, from Grand Rapids, MI and vice president of Coldwell Banker-AJS-Schmidt, explained how homes are holding their value. “Unlike stocks, where significant equity can vaporize overnight, there is little volatility in home prices, and most homeowners are experiencing very healthy long-term gains,” she said.
“The costs of construction trends up from one year to the next, so even in areas that experience price declines, owners who maintain their property generally retain most of the equity that has built-up in their homes over time.”
A separate NAR survey shows the typical owner stays in a home for six years. “While local conditions vary greatly, a typical owner who bought six years ago is seeing a 45% increase in the value of their home. Even so, it isn’t valid to directly compare homeownership with stocks. Although a home is normally a long-term appreciating asset, it is primarily shelter – most owners sell when their needs change, not when the market turns,” Combs said.
An analysis of all available data over the past six years shows almost every market experienced price gains from the second quarter of 2001 to the second quarter of this year.
According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was 6.37% in the second quarter, up from 6.22% in the first quarter; the rate was 6.60% in the second quarter of 2006.
The best total sales performance was in Wyoming, where existing-home sales rose 10.8% from the second quarter of 2006. In Iowa, the second-quarter sales pace rose 4.1% from a year ago, while North Dakota experienced the third strongest gain, up 2.9%. Oklahoma, Indiana and Nebraska also posted annual sales gains.
In the second quarter, the largest single-family home price increase was in the Salt Lake City area, where the median price of $233,100 rose 21.9 percent from a year ago. Next was Binghamton, N.Y., at $111,200, up 19.8 percent from the second quarter of 2006, followed by Salem, Ore., where the second quarter median price increased 16.7 percent to $227,900. Most of the metros with price declines were modest, although four areas experienced double-digit drops.
Median second-quarter metro area single-family home prices ranged from a very affordable $71,700 in Elmira, N.Y., to 12 times that amount in the San Jose-Sunnyvale-Santa Clara area of California where the median price was $865,000. The second most expensive area was San Francisco-Oakland-Fremont, at $846,800, followed by the Anaheim-Santa Ana-Irvine area (Orange County, Calif.), at $727,000.
In addition to Elmira, other affordable markets include the Youngstown-Warren-Boardman area of Ohio and Pennsylvania, at $76,700, and the Saginaw-Saginaw Township North area of Michigan, with a second-quarter median price of $86,900.
Median Price in Condo Sector Up 1%
In the condo sector, metro area condominium and cooperative prices – covering changes in 55 metro areas – show the national median existing condo price was $226,800 in the second quarter, up 1.0% from $224,500 in the second quarter of 2006. Thirty-seven metros showed annual increases in the median condo price, including seven areas with double-digit gains; one was unchanged and 17 areas had price declines.
The strongest condo price gains were in the Salt Lake City area, where the second quarter price of $162,200 rose 25.2 percent from a year earlier, followed by Reno-Sparks, Nev., at $220,500, up 17.0%, and the Austin-Round Rock area of Texas, where the median condo price of $172,100 rose 14.9% from the second quarter of 2006.
Metro area median existing-condo prices in the second quarter ranged from $116,400 in Greensboro-High Point, N.C., to $608,700 in the San Francisco-Oakland-Fremont area. The second most expensive condo market reported was Los Angeles-Long Beach-Santa Ana, at $413,400, followed by the San Diego-Carlsbad-San Marcos area at $368,600.
Other affordable condo markets include Wichita, Kan., at $117,900 in the second quarter, and Rochester, N.Y., at $118,900.
Regionally, existing-home sales in the Northeast fell 6.8% to an annual pace of 1.05 million units in the second quarter from the same period a year ago. The median existing single-family home price in the Northeast rose 0.7 percent to $298,000 in the second quarter from the same period 2006.
After Binghamton, N.Y., the strongest price increase in the Northeast was in the Allentown-Bethlehem-Easton area of Pennsylvania and New Jersey, with a median price of $274,500, up 12.8% from the second quarter of last year, followed by the Reading, PA, area, at $157,800, up 11.2%, and Glenn Falls, N.Y., which rose 10.7% to $175,500.
In the Midwest, total existing-home sales dropped 8.4% to a 1.39 million-unit annual level in the second quarter compared with a year ago. The median existing single-family home price in the Midwest was $163,500, down 2.2% from the second quarter of 2006.
The strongest metro price increase in the Midwest was in the Bismarck, ND, area where the median price of $151,400 was 9.2% higher than a year ago. Next was Gary-Hammond, Ind., at $137,800, up 7.3% from the second quarter of 2006, and Bloomington-Normal, IL, at $161,500, up 7.0%.
Total existing-home sales in the South were at an annual rate of 2.31 million units in the second quarter, down 10.7% from the second quarter of 2006. The median existing single-family home price in the South was $185,000 in the second quarter, which is 1.6% below a year earlier.
The strongest price increase in the South was in the Beaumont-Port Arthur area of Texas, at $127,700, up 11.8% from a year ago, followed by the Cumberland area of Maryland and West Virginia, with a 9.3% gain to $109,300, and Raleigh-Cary, N.C., at $225,100, up 8.4%.
In the West, the existing-home sales pace of 1.16 million units fell 16.9% from the second quarter of 2006.
The median existing single-family home price in the West was $349,400 in the second quarter, down 0.4% from a year ago.
After Salt Lake City and Salem, the strongest metro price increase in the West was in Farmington, NM, at $201,900, up 14.0% from a year ago, followed by the Spokane, WA, area, at $197,700, up 10.4% from the second quarter of 2006.
The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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1 Areas are generally metropolitan statistical areas as defined by the U.S. Office of Management and Budget. A list of counties included in MSA definitions is available at: www.census.gov
Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Quarter-to-quarter comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns.
NAR began tracking of metropolitan area median single-family home prices in 1979; the metro area condo price series was launched at the beginning of 2006, with several years of historic data.
Because there is a concentration of condos in high-cost metro areas, the national median condo price sometimes is higher than the median single-family price. In a given market area, condos typically cost less than single-family homes. As the reporting sample expands in the future, additional area will be included in the condo price report.
Tables of metropolitan area median prices, percent changes and some historic data are available at the site below – under Research click on Housing Statistics, then scroll down the center to Metropolitan Area Prices.
2 The seasonally adjusted annual rate for a particular quarter represents what the total number of actual sales for a year would be if the relative sales pace for that quarter was maintained for four consecutive quarters. Total home sales include single family, townhomes, condominiums and co-operative housing. NAR began tracking the state sales series in 1981.
Seasonally adjusted rates are used in reporting quarterly data to factor out seasonal variations in resale activity. For example, sales volume normally is higher in the summer and relatively light in winter, primarily because of differences in the weather and household buying patterns.
Tables of state resale rates, percent changes and some historic data are available at the site below under Research – click on Housing Statistics, then scroll down the center to State Existing-Home Sales.
Third quarter metro home price and state resale data will be released November 21.