Home Prices Skyrocket in 1st Quarter
To see national total homes sales which include single-family homes and condos grow 5% year-over-year and 1.4% compared to the 4th quarter, 2016, reaching a total of 5.62 million total sales is incredible for the first quarter of 2017, but to know that it is the second highest growth rate in real estate sales since 2007’s 5.66 million is outstanding. However, that is where home sales stand in the first quarter of this year. Currently, there is only a 3.7
month supply of homes available for purchase, turning the market into a buyer’s market vs. a seller’s market. Unfortunately for buyers, this has caused a problem when trying to buy affordably because home pricing has once again been on the rise after leveling out after the Recession.
For three quarters in a row, home prices have been on the rise. The national median sales price for a single-family home was $232,100 in the 1st quarter which is an increase of 6.9% in a year-over-year comparison with 2016. The highest growth of prices was actually seen in the 2nd quarter of 2015 when prices went up 8.2% in one quarter. This is the second highest growth rate since. During the 4th quarter of 2016, home buyers experienced a 5.9% in home prices, so the startling upward trend in the 1st quarter of the year is of concern with inventory dwindling and more buyers entering the market. The most problematic part of this is that as home prices rise, the interest rates have also been increased, so the combination of 
the two have shown a slight lull in home sales as buyers have had to adjust and try to qualify with the new pricing and rates.
“Prospective buyers poured into the market to start the year, and while their increased presence led to a boost in sales, new listings failed to keep up and hovered around record lows all quarter,” Lawrence Yun, NAR chief economist said. “Those able to successfully buy most likely had to outbid others – especially for those in the starter-home market – which in turn quickened price growth to the fastest quarterly pace in almost two years.”
Added Yun, “Several metro areas with the healthiest job gains in recent years continue to see a large upswing in buyer demand but lack the commensurate ramp up in new home construction. This is why many of these areas – in particular several parts of the South and West – are seeing unhealthy price appreciation that far exceeds incomes.”
In the southern region, there is encouraging news as total home sales increased 5.8% year-over-year compared to the 1st quarter of 2016 but also quarter-over-quarter as compared to the 4th quarter of 2016. However, one thing to watch was the 8.8% increase in home pricing compared to the first quarter of 2016, bringing the average home price to $209,000 in the South.
