More Good News for U.S. and California Home Shoppers, as Appreciation Slows
- The median price for an existing U.S. single-family home was $257,600 as of the fourth quarter, up by 4.0 percent year over year.
- U.S. home price growth outpaced annual appreciation in the San Francisco metropolitan area, while San Jose saw home prices fall from the fourth quarter of 2017.
- Despite cooling price growth, San Francisco and San Jose remain America’s most expensive housing markets.
Nationwide, homebuyers had more properties to choose from in the fourth quarter than they did a year ago, while major California housing markets saw price growth moderate.
That’s according to the latest quarterly report from the National Association of Realtors, which puts the median price for an existing U.S. single-family home at $257,600 in the fourth quarter of 2018, a year-over-year gain of 4.0 percent. Home prices rose in 92 percent of measured metropolitan areas, but only 8 percent posted double-digit-percent annual gains.
There were 1.55 million existing homes on the market, a 6.2 increase from the fourth quarter of 2017. The country’s monthly supply of inventory ended 2018 at 4.0, up from 3.5 the previous year. Although mortgage-rate increases caused affordability to decline on an annual basis in spite of wage growth, the situation looks more promising for previously frustrated buyers coming into 2019.
“Home prices continued to rise in the vast majority of markets but with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace,” NAR Chief Economist Lawrence Yun said in a statement.
Unlike in previous quarters, U.S. home price growth outpaced appreciation in the Bay Area, according to supplemental data from NAR. Home prices in the San Francisco metropolitan area rose by 3.5 percent from the fourth quarter of 2017, while San Jose saw prices fall by 1.6 percent, though they remain the country’s two most expensive housing markets, at a respective $952,400 and $1,250,000. Price growth in Los Angeles slightly eclipsed the national rate at 4.1 percent, to end the fourth quarter at $576,100.
All three of those California cities saw year-over-year appreciation drop from the third quarter, when NAR registered 11.6 price growth percent in San Jose, 9.9 percent in San Francisco, and 5.7 percent in Los Angeles.
“The West region, where home prices have nearly doubled in six years, is undergoing the biggest shift with the slowest price gain and large buyer pullback,” Yun noted.
NAR’s report lines up with recent research from Compass Chief Economist Selma Hepp, which points to an uptick in price reductions for homes in both the Bay Area and Los Angeles at the end of 2018 and the beginning of 2019. Hepp also says that cooling price growth, more inventory, and stable mortgage rates are helping to shift the market balance more toward California homebuyers, though Yun believes that the entire Western U.S. would greatly benefit from more construction.