During the last quarter of 2014, the United States saw solid price growth for homes, with most metro areas seeing a slightly stronger rate of growth.
According to the article in Propertywire, this growth was due to lower levels of housing supplies combined with low interest rates and an improving jobs market, with these facts being gleaned from the National Association of Realtors. During the fourth quarter, the median price for an existing single family home was $208,700, an increase of 6% year-on-year and the median price rose in 150 out the 175 metro areas tracked, equating to 86% overall. This is a much stronger rate of price growth than the third quarter when 73% of metro areas saw increases. The latest figures also show that 14% or 24 areas saw double digit price increases during the fourth quarter.
These price increases are certainly good for those people who already own their own homes, but do mean that anyone looking to buy in the near future will face more of a challenge because house price growth is continuing to outpace wages growth. Experts point out that low interest rates have helped to preserve housing affordability, but that greater increases in wages combined with an increased housing supply are needed to help meet the pent-up demand for housing.
Sales of existing homes which includes single family homes and condominiums, fell by 1% during the last quarter of last year to reach a seasonally adjusted rate of 5.07 million, but overall existing home sales are 2.6% higher year-on-year. At the end of last year there were 1.85 million existing homes for sale, slightly less than the 2.01 homes for sale during the last quarter of 2013. There was a 4.9 month supply of homes during the fourth quarter of last year, whereas a supply of six to seven months is considered to indicate a healthy market.
Overall most of the country had affordable housing, but upward pressure on house prices is still persisting in certain metro areas, particularly in the west where there is an insufficient supply of homes available to meet demand. Real estate experts are concerned that unless builders are able to boost construction levels this spring, there will be house shortages that will apply additional pressure on house prices. The most expensive area for homes during the last quarter of 2014 was in San Jose, California, where the median price for an existing family home was $855,000.