The majority of metropolitan areas saw steady but slightly stronger price growth in the fourth quarter of 2014, behind a decline in housing supply and an uptick in demand fueled by lower interest rates and a stronger job market, NAR says in its latest quarterly metro price report. The median existing single-family home price increased in 86 percent of measured markets, with 150 out of 175 metropolitan statistical areas showing gains based on closings in the fourth quarter compared with the fourth quarter of 2013.
Lawrence Yun, NAR chief economist, says improved sales activity compared to a year ago and tightening supply contributed to faster price appreciation in the final quarter of 2014. “Home prices in metro areas throughout the country continue to show solid price growth, up 25 percent over the past three years on average,” he said. “This is good news for current homeowners but remains a challenge for buyers who are seeing home prices continue to outpace their wages. Low interest rates helped preserve affordability last quarter, but it’ll take stronger income gains and more housing supply to help meet the pent-up demand for buying.”