Home prices are rising more slowly amid the affordability crunch

New inventory has slowed down price gains

(Credit: iStock and Pixabay)
(Credit: iStock and Pixabay)

A new wave of inventory is putting a damper on rising U.S. home prices.

Price gains slowed in the fourth quarter amid a market that has created affordability challenges, Bloomberg reported. The median price for an existing single-family home was $257,600, a 4 percent increase from a year earlier, according to the National Association of Realtors. In the third quarter of 2018, the price rose 4.8 percent year over year.

“Home prices continued to rise in the vast majority of markets,” Lawrence Yun, NAR’s chief economist, said in the report. “But with inventory steadily increasing, home prices are, on average, rising at a slower and healthier pace.”

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Prices rose in 92 percent of markets last quarter — but only 14 of the 178 metropolitan areas in the report had double-digit increases, the report said. That’s down from 18 areas in the third quarter.

Home sales have fallen while rising interest rates have exacerbated affordability concerns. Last year, affordability fell to the lowest since late 2008, as home-price gains continued to outpace wage growth. About 1.55 million homes were for sale at the end of December, which was a 6.2 percent increase from 2017.

Purchases of previously owned homes fell across all regions. The biggest dip was in the West, where sales tumbled 14 percent. Existing home sales in the Northeast were down 5.4 percent from a year ago. The median existing single-family home price in the Northeast was $286,000 in the fourth quarter, up 6.5 percent from a year ago. [Bloomberg] — Meenal Vamburkar