The national median existing single-family home price climbed 6.6% annually to $274,900 in the fourth quarter of 2019, according to the National Association of Realtors.
During the quarter, home prices increased in 94% of measured markets, equating to 170 out of 180 metropolitan areas. This is up from the 93% share seen in the third quarter of 2019.
As housing inventory continues to dwindle, more and more homebuyers are facing affordability challenges due to rising home price appreciation, said NAR Chief Economist Lawrence Yun.
“It is challenging – especially for those potential buyers – where we have a good economy, low-interest rates and a soaring stock market, yet are finding very few homes available for sale,” Yun said. “We saw prices increase during every quarter of 2019 above wage growth.”
According to NAR, there were only 1.4 million existing homes available for sale at the end of 2019’s fourth quarter. This is 8.5% less than the total inventory available for sale at the end of the previous year’s Q4.
Average supply was also down in the fourth quarter, as months of supply declined from 4.0 months in Q4 2018 to 3.5 months in Q4 2019.
Online real estate marketplace realtor.com reported housing inventory fell to a near 3 -year low in the last month of Q4, with supply dropping by 12%.
This decline left the lowest number of homes available for sale in the U.S since January of 2018.
“The significant inventory drop we saw in December is a harbinger of the continuing imbalance expected to plague this year’s markets, as the number of homes for sale is poised to reach historically low levels,” Realtor.com Senior Economist, George Ratiu said.
December’s inventory decline contributed to significant home price increases in a majority of the nation’s housing markets, regardless of price bracket.
NAR reports 18 housing markets across the country experienced double-digit price growth in Q4, including Trenton, New Jersey (18.2%), Boise City-Nampa, Idaho (13.7%), Gulfport-Biloxi, Mississippi (11.8%), Kingston, New York (11.2%) and Albuquerque, New Mexico. (11.1%).
While some of the increases are due to the changes in the types of homes that were available for sale during the quarter, Yun also attributes price growth to imbalances between the nation’s homebuyers and sellers.
“Rising home values typically create wealth gains for existing homeowners as shown in NAR’s latest study, however, areas that are deemed ‘too expensive’ will obviously have trouble attracting residents and companies looking to do business there,” Yun said. “We need a good balance that benefits both current and future homeowners, but right now, the balance is still in favor of home sellers.”