Home sales across the country led to a steady rise in home prices in most metro areas in the second quarter of 2015, according to the National Association of Realtors® (NAR). Increases in the number of closings were reported in 163 of the 176 Metropolitan Statistical Areas (MSAs). Only seven percent of MSAs recorded lower median prices when compared to a year earlier. The gains are attributed to a lack of inventory in many markets across the country.
The were a greater number of rising markets in the second quarter than the first quarter, a period that saw price gains in eight-five percent of metro areas. Although the number of markets reporting double-digit increases declined over fifteen percent between the first and second quarters to thirty-four metro areas, the number of markets with double-digit gains is still nearly fifty percent greater than in 2014. “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, chief economist (NAR). “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.”
During the second quarter, the national median home price for a single-family home was $229,400, an 8.2 percent year-over-year increase. Additionally, the first quarter of 2015 saw median home prices rise by more than seven percent compared to a year earlier. The most expensive housing markets included San Jose, CA, with a median existing single-family home price of $980,000; San Diego, $547,800; San Francisco, $841,600; Honolulu, $698,600 and Anaheim-Santa Ana, CA, $685,700.
The five most affordable metro areas in the second quarter included Cumberland, MD, where the home price for a median single-family was $82,400, Elmira, NY, $98,300; Youngstown-Warren-Boardman, OH, $85,000; Decatur, IL, $96,000 and Rockford, IL, $94,700. In fact, the number of existing home sales, including condominium and single family, increased over six percent from a seasonally adjusted annual rate of 4.97 million units during the first quarter to 5.30 million units in the second quarter. The report notes that these figures are 8.5 percent higher than the 4.89 million pace of the 2014’s second quarter.
Both the nine-county Chicago Metropolitan area and the City of Chicago reported increases, with the number of home sales surging 9.6 percent and 9.7 percent, respectively. The median home price jumped over five percent to $285,000 in the City. If home prices continue their steady gains it could top the $300K mark in 2016. “We’ve seen solid gains throughout the year, and there is every expectation that we’ll see the market momentum continue into the fall as buyers select from reduced inventories,” said Hugh Rider, president, Chicago Association of Realtors®.
Homes for sale in Illinois are spending less time on the market and the state-wide average time on market is 58 days, a decline of 8.6 percent from the previous month. On average, homes are spending seven days less time on the market than last year. But inventory remains tight with 72,371 homes for sale in the state, a decrease of nearly eight percent since 2014, based on data from the Multiple Listing Service (MLS).
Mortgage rates are up slightly, but still at record lows which is good news for home buyers. The average 30-year fixed mortgage rate for the North-Central region crept up to 4.04 percent in July 2015 which is slightly higher than the 3.98 percent in the previous month, but still lower than the 4.11 percent rate in 2014.
With the rising Chicago market Realtor® jobs are in demand as real estate agents remain very busy working with buyers and sellers and keeping up with local market conditions as home prices and mortgage rates continue to climb.