According to the latest quarterly report [1] by the National Association of Realtors [2] (NAR), year-over-year home price growth continued in most metros, albeit at a slightly lessened pace. The median existing single-family home price increased in 74 percent of measured markets. Furthermore, 125 out of 170 metropolitan statistical areas (MSAs) showed gains in the first quarter of 2014 compared to Q1 2013.
Double-digit increases were realized in 37 areas, representing 22 percent of MSAs. Median prices were lower in 45 areas.
NAR found the national median existing-single family home price was $191,600 in the first quarter, up 8.6 percent from the previous year. The fourth quarter median price rose 10.1 percent from a year earlier.
According to Lawrence Yun, NAR chief economist, the price trend is favorable.
"The cooling rate of price growth is needed to preserve favorable housing affordability conditions in the future, but we still need more new-home construction to fully alleviate the inventory shortages in much of the country," Yun said. "Limited inventory is creating unsustainable and unhealthy price growth in some large markets, notably on the West Coast."
Distressed homes accounted for 15 percent of first quarter sales, down from 23 percent a year ago.
Yun noted smaller areas had some of the biggest changes in median price from a year ago. "Prices in smaller areas tend to be a bit more volatile, with changes in the share of distressed sales affecting comparisons," he said. "In such cases, looking at the annual prices for those areas help to put it into perspective."
At the end of the first quarter, there were roughly 2 million existing home available, 3.1 percent above the first quarter of 2013. Total existing-home sales fell 6.9 percent to a seasonally adjusted annual rate of 4.6 million in Q1 2014 from 4.94 million in Q4 2013.
NAR President Steve Brown said there's been some trouble in housing affordability.
"Both home prices and mortgage interest rates are higher than a year ago, but the good news is that median income is enough to purchase a home in most areas. There are good potential buying opportunities in areas where there has been consistent local job creation, and where prices have not risen significantly, or where they may be experiencing temporary declines," he said.
The five most expensive housing markets in the first quarter for existing single-family homes were San Jose, California ($808,000); San Francisco, California ($679,800); Honolulu, Hawaii ($672,300); Anaheim-Santa Ana, California ($669,800); and San Diego, California ($483,000).
The availability of credit to secure to a loan is still a troubling issue, particularly with higher fees from the Federal Housing Administration (FHA).
"Restrictive mortgage credit remains an unnecessary headwind for the housing market, but NAR is also concerned about costly mortgage insurance fees imposed on Federal Housing Administration-backed home loans that have more than doubled since 2010, pricing out as many as 125,000 to 375,000 buyers," Brown said.
He continued, "When you combine the increases in home prices and interest rates with record-high premiums, home purchases are becoming increasingly out of reach for many qualified borrowers who rely on FHA financing."