Thursday, July 19, 2012

NAR: Median home price in West up 9.1 percent

The median home price in the U.S. West rose 9.1 percent from June 2011 to June 2012. According to new existing home sales data, recently released by the National Association of Realtors, the median home price in the West rose the most of all other regions.  The median home price in the Northeast, for example, was flat from June 2011 to June 2012. Nationally, the year-over-year change was 5.7 percent.

The rise in prices was likely precipitated by overall rising home sales and by declining inventory this year which as of June are at the second-highest level experienced since the homebuyer tax credit expired in 2010.  Home sales were pushed up in 2010 as the tax credits wound down.  Many months of declining sales followed the end of the tax credits, and June's increase signals a rise to some of the largest amounts of home sales activity we've seen since 2010. Nevertheless, June sales were flat from May to June and were actually down from June 2011, falling 3.4 percent. Only the West region experienced a drop in home sales. Nationwide, home sales increased 5 percent.

What we see is a phenomenon in which prices are moving up significantly, but sales activity is somewhat flat. This points toward declining inventory as being a major factor here. Bidding wars are leading to a situation where there are higher prices, but not necessarily a much larger number of actual sales.

The first graph shows median home prices for all regions plus the U.S. The price in the West rose slightly from May to June and so far this year is generally up compared to other months since early 2010.

The second graph shows closings by region.The number of transactions is not much larger in 2012 compared to 2011. Regional price increases seem to be a function not just of some small increases in sales activity, but also from a declining inventory.

The NAR data tends to be one of the more optimistic among the various reports on home prices and home sales activity, reporting larger increases than what we've seen regionally or locally. See here for more. 

The more local home sales activity has shown more growth in sales activity up through April than the West region as a whole. We're still waiting on more recent data for Colorado-specific sales. 

This NAR report suggests ongoing mild increases in demand for homes, although that growth is not immense in the West region.