Washington, DC, February 15, 2006--Numerous metropolitan areas showed double-digit annual home price appreciation in the fourth quarter, although the overall pace of growth has cooled slightly, according to the latest survey by National Association of Realtors. In addition, annual appreciation in metro area condo prices was mostly in the double-digit range.
The association’s fourth-quarter metro area single-family home price report, covering 145 metropolitan statistical areas,* shows a record 72 areas with double-digit annual increases in median existing single-family home prices and only six areas posting price declines. The previous record for areas showing double-digit price appreciation was 69 metros in the third quarter of 2004.
The national median existing single-family home price was $213,000 in the fourth quarter, up 13.6 percent from a year earlier when the median price was $187,500. The median is a typical market price where half of the homes sold for more and half sold for less. In the third quarter of 2005, the annual rate of home-price appreciation was 14.7 percent.
David Lereah, NAR’s chief economist, said the modest dip in appreciation is an early sign of a market adjustment. “Although home sales have eased, the tremendous momentum in price appreciation was sustained in the fourth quarter because tight inventories still favored sellers,” he said. “The good news is that the supply of homes on the market has been trending up and we are entering a period of a more normal balance in supply and demand.”
Beginning with this report, NAR is launching a new series on metro area condominium and cooperative prices, covering changes in 51 markets; co-ops are a very small market share and are included with condo data. In the fourth quarter, the national median existing condo price was $228,200, which is 12.3 percent higher than a year ago. In all, 27 areas showed double-digit annual gains in the median condo price; there were seven areas with declines.
“The national condo price is higher than the median single-family home price because there is a high concentration of condos in the most expensive metropolitan areas,” Lereah said. “The data shows that within a given area, the typical single-family home costs more than the median condo price.”
NAR President Thomas M. Stevens said the long-term outlook for home prices and sales is favorable. “There is a powerful underlying demand for homes from a growing population, which will keep housing at a high plateau,” said Stevens, senior vice president of NRT Inc.
“The children of the baby boom generation, often called the echo-boomers, are the second largest generation in U.S. history and are just entering the period in which people typically buy their first home. Along with a strong immigrant impact, and the boomers themselves who remain in peak earnings years, this means the need for housing will stay strong over the next decade and long-term prices will continue to rise,” Stevens said.
The biggest single-family price increase in the nation was in the Phoenix-Mesa-Scottsdale area of Arizona, where the fourth quarter price of $268,400 rose 48.9 percent from a year earlier. Next was Cape Coral-Fort Meyers, Fla., at $293,100, up 48.0 percent from the fourth quarter of 2004. Orlando, Fla., with a fourth quarter median price of $261,800, was up 42.0 percent in the last year.
Median fourth-quarter metro area single-family prices ranged from $63,800 in Danville, Ill., to nearly 12 times that amount in the San Jose-Sunnyvale-Santa Clara area of California where the median price was $747,000. The second most expensive area in the United States was the San Francisco-Oakland-Fremont area at $718,700, followed by the Anaheim-Santa Ana-Irvine area (Orange Co., Calif.) at $699,800.
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