In more areas around the country, median prices for existing U.S. homes increased during the second quarter of this year, according to the latest report from the National Association of Realtors, partly in response to dwindling inventory.
During the second quarter, the national existing-home median price – the price at which half of the sold for more and half sold for less – rose to $181,500 up 7.3 percent from $169,100 during the same quarter last year. The NAR reports that this is the biggest yearly jump since the first quarter of 2006.
More metropolitan statistical areas (MSAs) saw price improvements as well in the second quarter. The median price rose in 110 of the 147 MSAs from the second quarter of 2011. That’s a marked improvement over the first quarter of this year, when there were just 74 areas will price gains and a huge increase from a year earlier when only 41 of the areas has rising prices.
“It’s most encouraging to see a growing number of metro areas with rising median prices, which is improving the equity position of existing homeowners.” said Lawrence Yun, NAR chief economist. ”Inventory has been trending down and home builders are still under-producing in relation to growing demand. Some of the improvement in prices is due to a smaller share of sales in low price
ranges where inventory is tight.”
For example, in the West the median home price for existing homes shot up $234,000 in the second quarter from the previous year, but “inventory is pretty tight in all prices ranges in most of the West except for the upper end, which accounts for the sharp price gain,” Yun said.
Inventory has indeed slipped, with 2.39 million existing homes on the market in the second quarter, down 24.4 percent from the same quarter of 2011.
NAR President Moe Veissi hinted that now is the time to unleash the “shadow inventory” of distressed properties that many say banks are holding on to.
“What we need now is additional inventory in the lower price ranges, so we hope banks will be releasing more foreclosure inventory into the market. With gains apparent in all of the price measures, banks also should have more confidence in expanding mortgage credit to home buyers using safe but sensible standards,” Veissi said.