The national median home price saw the strongest year-over-year increase in seven years as a growing number of metropolitan areas posted higher median values in the fourth quarter of 2012, the National Association of Realtors said.
Favorable affordability conditions, increasing rent rates, demand for housing and job creation are some of the drivers leading to solid home price performance, said chief economist Lawrence Yun at NAR.
“Home sales are on a sustained uptrend, mortgage interest rates are hovering near record lows and unsold inventory is at the lowest level in 12 years,” he said. “Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play.”
The median existing single-family home price rose in 133 out of 152 metropolitan statistical areas (MSAs) based on closings in 4Q12, compared with the previous year. Additionally, 19 areas had prices drop, NAR said.
The national median existing single-family home price hit $178,900, up 10% from last year. This is the strongest year-over-year price increase since the fourth quarter of 2005, when the median price rose 13.6%.
A contracting market share of lower priced homes continues to account for price growth.
For instance, distressed homes accounted for 23% of fourth quarter sales, down 30% from the previous year, according to NAR.