US median home supplies has been recorded at all time low in Q4 that resulted an increase in sales price of more than half of measured markets surpassing its peak level since 2005, reported by the National Association of Realtor (NAR).
The report reveals that the average existing single-family home prices increased in 89 per cent of measured markets which is higher than third quarter as well as fourth quarter of 2015. Overall in 2016, 87 per cent of measured area’s home prices have gone up which is slightly higher rate than 2015 (86 per cent) and 2014 (75 per cent).
The buyer’s interests to purchase new home were high due to unchanged mortgage rate throughout the year and the creation of 1.7 million. But the insufficient inventory conditions were not able to fill up the supplies in order to fulfil the demand that pushed the price to the top, said by Lawrence Yun, Chief Economist, NAR.
“Depressed new and existing inventory conditions led to several of the largest metro areas seeing near or above double-digit appreciation, which has pushed home values to record highs in a slight majority of markets. The exception is in the Northeast, where price growth is flatter because of healthier supply conditions.” He adds.
Compared to the third quarter, the US residential market in Q4 has seen a slight 3.3 per cent increase in sales including single family and condos. Despite this boost and the rise in national family average income, the affordability has weakened as mortgage rate has increased at the end of the year.
“Even a pick-up in wage growth may be insufficient to compensate the impact of higher mortgage rates and home prices. Increased homebuilding will be crucial to alleviate supply shortages and stave off the affordability hit,” Yun again adds.
Source: World Property Journal