Despite low inventory levels, the median existing single-family home price increased in 93 percent of measured markets, with 163 out of 176 metropolitan statistical areas (MSAs) showing gains based on closings in the second quarter compared with the second quarter of 2014. Meanwhile, only 13 areas recorded lower median prices from the previous year.
"Steady rent increases, the slow rise in mortgage rates, and stronger local job markets fueled demand throughout most of the country this spring," said Lawrence Yun, NAR's chief economist. "While this led to a boost in sales paces not seen since before the downturn, overall supply failed to keep up and pushed prices higher in a majority of metro areas."
According to the NAR, price gains were recorded in 85 percent of metro areas in the first quarter. In addition, 34 metro areas experienced double-digit increases in the second quarter, a decline from the 51 metro areas in the first quarter.
"With home prices and rents continuing to rise and wages showing only modest growth, declining affordability remains a hurdle for renters considering homeownership—especially in higher-priced markets," Yun said.
On a national level, the median existing single-family home price in the second quarter was $229,400, an increase of 8.2 percent from the second quarter of 2014 when the price was $212,000. Year-over-year, the median price rose 7.1 percent in the first quarter.
San Jose, California metro area topped the list of the most expensive housing markets, with a median existing single-family price of $980,000, followed by San Francisco, California ($841,600); Anaheim-Santa Ana, California ($685,700); Honolulu, Hawaii ($698,600); and San Diego, California ($547,800).
There were 2.30 million existing homes available for sale at the end of the second quarter, slightly above the 2.29 million homes for sale at the end of the second quarter in 2014. NAR says the average supply during the second quarter was 5.1 months—down from 5.5 months a year ago.
NAR also reported that the total number of existing-home sales, including single family and condo, increased 6.6 percent to a seasonally adjusted annual rate of 5.30 million in the second quarter from 4.97 million in the first quarter.
"The ongoing rise in home values in recent years has greatly benefited homeowners by increasing their household wealth," Yun said. "In the meantime, inequality is growing in America because the downward trend in the homeownership rate means these equity gains are going to fewer households."
Chris Polychron, NAR president and executive broker with 1st Choice Realty in Hot Springs, Arkansas noted that the Realtors are reporting strong competition and limited days on market for available homes—especially at the entry-level price range.
"Buyers should work with their Realtor to deploy a negotiation strategy that helps their offer stand out," Polychron said. "If a bidding war occurs, it's important for the buyer to stay patient and only counteroffer up to what he or she can comfortably afford. It's better to walk away and wait for the right home instead of being in a situation where one has purchased a home above their means."