Many Metro Areas Experiencing Strong Price Gains Says NAR

11/14/2002

From: Walter Molony of the National Association of Realtors, 202-383-1177; email: wmolony@realtors.org

WASHINGTON, Nov. 14 -- Most metropolitan areas experienced moderate-to-strong price gains during the third quarter as housing inventories remained lean, according to the latest survey by National Association of Realtors(r).

The association's third-quarter metro area home price report, covering changes in 121 metropolitan statistical areas (see note a) shows 33 areas with double-digit annual increases in median existing-home prices and only seven areas posting generally minor declines.

David Lereah, NAR's chief economist, said supply-and-demand fundamentals remain at play in the market. "Home prices have been rising faster than historic norms primarily because there are more buyers than sellers in most of the country," he said. "The lean inventory of homes available for sale, against a backdrop of record sales, has been driving home prices for the last two years."

There was an average 5.0-month supply of homes on the market during the third quarter; NAR considers a 6.0-month supply to be generally a balanced market. The national median existing-home price was $161,800 during the third quarter, up 7.2 percent from the third quarter of 2001 when the median price was $150,900. The median is the midpoint, which is a typical market price where half of the units sold for more and half sold for less.

NAR President Cathy Whatley said the housing market is expected to return to a general balance between buyers and sellers in 2003. "The good news for buyers is that we will be coming off record sales and the supply of homes is expected to improve, so people in most areas will be able to make decisions without feeling rushed to beat a competing bid," she said.

"Returning to a housing market in equilibrium means we'll see a slowing in the rate of price appreciation to what is considered normal and healthy," Whatley said. "We expect the national median price to rise 4.2 percent next year." Since record keeping began in 1968, the median home price typically has risen at the general rate of inflation, plus one-to-two percentage points.

The strongest metro area increase was in the Monmouth-Ocean area of New Jersey, where the third-quarter median existing-home price of $273,500 was 26.0 percent higher than a year earlier. Next came Sacramento, with a median price of $219,800, up 24.6 percent from the third quarter of 2001. Third was Providence, where the third quarter price of $203,300 rose 24.1 percent from a year ago. Median third-quarter metro resale prices ranged from $86,600 in Buffalo-Niagara Falls to more than six times that amount in the San Francisco Bay area, where the median price was $530,900. The second most expensive area was Anaheim-Santa Ana (Orange Co., Calif.), with a third quarter median resale price of $439,400, followed by Boston at $415,800.

Other low-cost markets include Beaumont-Port Arthur, Texas, the second least-costly area at $89,200, and El Paso, Texas, with a third quarter typical resale home price of $89,600. Regionally, the strongest increase during the third quarter was in the Northeast, where the median resale price of $166,200 rose 10.2 percent from a year earlier. After Monmouth-Ocean and Providence, the strongest increase in the region was in the Nassau-Suffolk area of New York, with a third quarter median price of $326,200, up 23.9 percent in the last year. This was followed by the New York City area, where the typical resale price of $328,000 rose 19.4 percent from a year ago; seven other metro areas in the Northeast also showed double-digit annual median price gains.

The third quarter median existing-home price in the West was $214,800, up 8.6 percent from a year ago. After Sacramento, the highest increase in the region was in San Diego, with a median price of $379,200, up 21.5 percent from the third quarter of 2001. Anaheim-Santa Ana, at $439,400, was up 20.3 percent from the third quarter of 2001. Los Angeles, with a third quarter median price of $290,000, rose 17.6 percent from a year earlier, while four other Western metros also experienced double-digit price gains.

In the South, the median existing-home price of $151,600 rose 8.4 percent from the third quarter of 2001. The strongest increase in the region was in the Washington, D.C., area, where the median price of $259,300 was 17.0 percent higher than a year earlier. In Miami-Hialeah, the third-quarter median price of $198,800 was up 16.2 percent in the last year, while Gainesville, Fla., at $135,800, rose 15.5 percent from a year ago. Five other metro areas in the South experienced double-digit annual rises. In the Midwest, the median resale home price of $140,700 during the third quarter was 5.1 percent higher than the same period in 2001. The strongest increase in the region was in Milwaukee, with a median price of $175,900, up 15.4 percent in the last year. The next highest increase was in the Fargo, N.D., area, where the median price of $109,700 was 12.4 percent higher than the third quarter of 2001, followed by Minneapolis-St. Paul, at $189,400, up 11.1 percent in the last year. Three other metro areas in the Midwest saw double-digit price increases from a year ago. The National Association of Realtors(r), "The Voice for Real Estate," is America's largest trade association, representing more than 840,000 members involved in all aspects of the residential and commercial real estate industries.

Note a: Areas are generally metropolitan statistical areas (MSAs) as defined by the U.S. Office of Management and Budget. They include the specified city or cities and surrounding suburban areas. Regional median home prices include rural areas and samples of many smaller metros that are not included in this report; the regional percentage changes do not necessarily parallel changes in the larger metro areas.

Tables of metropolitan area median prices, percent changes and historic data are available at http://realtor.org/research -- click on Existing Home Sales, then Metropolitan Area Prices.

Information about NAR is available at http://realtor.org. This and other news releases are posted in the Web site's "News Media" section under NAR News Releases. Statistical data and surveys may be found at http://realtor.org/research.

REALTOR(r) is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS(r) and subscribe to its strict Code of Ethics.