Home Prices Rise in Q3

Competition between first-time homebuyers and investors, combined with low inventory levels and a measured release of distressed homes by banks and lenders, is driving home prices up across the United States. All but 29 of the 149 markets measured by the National Association of Realtors showed improvement in the third quarter.

Prices for single-family homes rose in 81 percent of U.S. cities in the third quarter, growing in 120 of the housing markets measured by the National Association of Realtors.

The 120 improving metropolitan areas, out of 149 measured, saw median sales price increases from the previous year, according to the NAR report. In the second quarter, 110 areas made gains.

U.S. home prices jumped 5 percent in September from a year earlier, the biggest year-over-year increase since July 2006, as values climb out of a six-year slump. Buyers – investors and first-time buyers alike – are competing for a shrinking supply of properties listed for sale.

Investors, who make up the bulk of cash purchases, accounted for 17 percent of all transactions, down from 20 percent a year earlier. The share of all-cash home purchases fell to 27 percent in the third quarter from 29 percent a year earlier.

The best-performing metro area was Phoenix, Ariz., where prices increased 35 percent from a year earlier. Phoenix has consistently topped improving market lists throughout 2012. Prices also rose 28 percent in the Florida area of Cape Coral, and 27 percent in Akron, Ohio.

At the end of the third quarter, 2.32 million existing homes were available for sale, 20 percent less than a year earlier, according to the Chicago-based Realtors group.

The national median price for an existing single-family home was $186,100 in the third quarter, adding 7.6 percent to last year’s total, Realtors said. Foreclosures and short sales, where the price is less than the mortgage balance, accounted for 23 percent of third-quarter deals, down from 30 percent a year earlier.