Second Quarter Metro Area Home Prices Rise, Limited Inventory Capping Sales

The national median family income4 was $61,000 in the second quarter.  However, to purchase a home at the national median price, a buyer making a 5 percent downpayment would only need an income of $39,900.  With a 10 percent downpayment the required income is $37,800, while with 20 percent down the necessary income is $33,600.

“Because the income required to buy to a typical home is very manageable by historical standards, any further decline in mortgage interest rates will have little effect.  Changes in underwriting guidelines would have a far greater impact,” Yun said.

In the condo sector, metro area condominium and cooperative prices – covering changes in 53 metro areas – showed the national median existing-condo price was $178,000 in the second quarter, up 7.5 percent from the second quarter of 2011.  Twenty-nine metros showed increases in their median condo price from a year ago and 24 areas had declines.

First-time buyers purchased 34 percent of all homes in the second quarter, compared with 33 percent in the first quarter and 35 percent in the second quarter of 2011.  Historically they are close to 40 percent of the market.

The share of all-cash home purchases was 29 percent in the second quarter, down from 32 percent in the first quarter; it was 30 percent in the second quarter of 2011.  Investors, who make up the bulk of cash purchasers and compete with first-time buyers, accounted for 19 percent of all transactions in the second quarter, down from 22 percent in the first quarter; they were 19 percent a year ago.

Regionally, existing-home sales in the Northeast slipped 0.6 percent in the second quarter but are 10.6 percent above the second quarter of 2011.  The median existing single-family home price in the Northeast declined 1.6 percent to $241,300 in the second quarter from a year ago.

In the Midwest, existing-home sales rose 1.3 percent in the second quarter and are 16.2 percent higher than a year ago.  The median existing single-family home price in the Midwest rose 7.5 percent to $149,400 in the second quarter from the same quarter in 2011.

Existing-home sales in the South increased 1.3 percent in the second quarter and are 7.7 percent above the second quarter of 2011.  The regional median existing single-family home price increased 7.4 percent to $163,200 in the second quarter from a year earlier.

With tight inventory, existing-home sales in the West fell 5.3 percent in the second quarter but are 3.0 percent higher than a year ago.  The median existing single-family home price in the West jumped 13.4 percent to $234,000 in the second quarter from the second quarter of 2011.  “Inventory is pretty tight in all prices ranges in most of the West except for the upper end, which accounts for the sharp price gain,” Yun noted.