Home Prices Accelerate In Markets With Low Inventory

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A new report from the National Association of Realtors found that home prices increased at a faster rate during the first quarter of this year than they did at the end of last year. In fact, 51 metro areas saw double-digit increases during the first three months of the year, which is significantly higher than the 24 cities that saw double-digit gains at the end of last year. Lawrence Yun, NAR’s chief economist, said after moderating at the end of 2014, home prices have accelerated in several metro areas. “Sales activity to start the year was notably higher than a year ago, as steady hiring and low interest rates encouraged more buyers to enter the market,” Yun said. “However, stronger demand without increasing supply led to faster price growth in many markets.” In short, markets where there are a lot of buyers but a lower than normal amount of homes available for sale will experience more price increases than in markets where there are enough homes for sale to meet demand. Also in the report, the national median existing single-family home price in the first quarter was $205,200, which is a 7.4 percent increase from the same period last year when the median price was $191,100. More here.

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