The National Association of Realtors (NAR) released its quarterly metropolitan home sales report yesterday, and I found some bullish undertones in it.
While most people are focusing on the continued large year/year price drops, I have not heard anyone focusing on the fact that most cities showed sequential (qtr/qtr) price gains for the first time in roughly 2 years!
For the country as a whole, median sales prices rose +4% in Q2 vs. Q1 of this year. The median home price in the U.S. rose to $174,100 (which is still -15.6% below year-ago levels). Here are some of the largest quarterly increases for some notable cities:
- San Francisco (+18%), Boston (+16%), Washington D.C. (+14%), Dallas (+11%), and Chicago (+10%).
- Additionally, some of the cities that have been most cited for outsized speculation in recent years have also shown renewed stabilization: San Diego (+5%), Los Angeles (+3%), New York (+2%), Phoenix (+1%) and Miami (+1%).
We know that one datapoint does not make a trend, but I also know that these quarterly sales prices have been dropping every quarter since mid-2007. So this bounce is notable, and from here we'll just have to see if the trend is sustainable.
Hopefully home prices have now fallen sufficiently from their prior highs, up to 50% in many cities, that buyers feel better about stepping up. The low mortgage rates and first-time buyer tax credits should continue to bolster demand as well.
Here is a look at some of the year/year price declines in some of those notable cities I mentioned:
- Boston: -8.3%
- Chicago: -20.7%
- Dallas: -0.2%
- Los Angeles: -25.7%
- New York: -16.3%
- Phoenix: -36.1%
- San Diego: -20.2%
- San Francisco: -33.8%
- Washington D.C.: -14.0%
Two other notable cities that are still seeing declines are Ft. Myers (-52.8%) and Las Vegas (-39.7%).
Overall, home prices have fallen by record amounts in nearly all cities. For the first time in roughly two years, we are seeing a sequential uptick in home prices.
With the home affordability index near multi-decade highs, the odds are increasing that this single datapoint of rising home prices could further cement the notion that housing has bottomed, and that would have positive implications for home prices, consumer confidence, personal spending, as well as the overall economy and stock market.