© Nora Carol Photography/Getty Images
by Emily Graffeo
US home prices rose at a record pace in the 4th quarter, surpassing the previous peak in 2005.
The median price of a single-family home climbed 14.9% to $315,000 in the fourth quarter, according to the National Association of Realtors.
That’s the fastest pace of growth on record, surpassing the top from the last housing boom in 2005, according to data compiled by Bloomberg.
Every single metro area tracked by the NAR saw home prices grow from a year ago, while 88% (161) of the metros saw double-digit increases, compared to just 115 metros in the third quarter. It’s a sign of the continued housing boom in the US as mortgage rates remain in record-low territory.
The area with the highest price gain was Bridgeport, Connecticut, where prices soared 39%. By region, the Northeast experienced a 20.7% price increase, followed by the West at 15.5%, the Midwest at 15.1% and finally the South at 14.0%.
“Mortgage rates reached record lows, thereby driving up the demand,” said Lawrence Yun, NAR chief economist. “At the same time, inventory levels also reached record lows, leading to grim inventory conditions of insufficient supply in the fourth quarter.”
While Yun noted that low mortgage rates are helping Americans afford their monthly payments, he said that large home price spikes could soon become detrimental to homebuyers.
“The average, working family is struggling to contend with home prices that are rising much faster than income,” he said. “This sidelines a consumer from becoming an actual buyer, causing them to miss out on accumulating wealth from homeownership.”
The NAR found that families typically spent 14.8% of their income on mortgage payments, compared to 14.9% one year ago. With higher home prices, the average monthly mortgage payment marginally rose to $1,040 from $1,020, even as mortgage rates dropped significantly.