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National Association of Realtors releases MSA reports for the 4th quarter of 2017

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The National Association of Realtors (NAR) recently released the Metropolitan Median Area Prices and Affordability Report for the 4th quarter of 2017, which monitors various housing data in top United States metropolitan statistical areas (MSA). Some of the indices included in the quarterly report are:

  • Median sales price of existing single-family homes
  • Median sales price of existing condos and co-ops
  • The amount of new home construction relative to the number of newly employed workers

Major takeaways from the report include:

  1. There has been a significant increase in home sales across all surveyed MSAs that resulted in an all-time low in inventory level.
  2. The rise in home sales has led to the most robust growth in home prices.
  3. In about 2/3 of the surveyed MSAs, construction activity across all home types has been significantly outpaced by job growth in the last three years.

Median sales prices in North Carolina MSAs

North Carolina has 15 metropolitan statistical areas. The top ones ranked by population are:

  • Charlotte-Concord-Gastonia, NC-SC
  • Raleigh, NC
  • Greensboro-High Point, NC
  • Winston-Salem, NC
  • Durham-Chapel Hill, NC
  • Asheville, NC
  • Fayetteville, NC

As in most of the US, median sales prices for single-family homes in major NC MSAs increased in the last quarter of 2017. The rates of increase compared to the same period in 2016 are:

  • Charlotte-Concord-Gastonia – 8.6%
  • Raleigh – 8.2%
  • Durham-Chapel Hill – 7.9%
  • Greensboro-High Point – 9.3%
  • Winston-Salem – 3.0%
  • Fayetteville – 1.3%

As for condos and apartments, the median sales price trends in the surveyed MSAs are mixed:

  • Greensboro-High Point – (-5.8% )
  • Wilmington – 5.8%
  • Winston-Salem – 2.9%

New construction vs. employment in North Carolina MSAs

Consistent with the trend in most of the surveyed MSAs, new employment has outpaced new home building in most of North Carolina in the last three years.

3-year change in ratio of New Employment to New Home Building3-year average annual employment growth
Greensboro-High Point1.40.9%

2018 sales price and supply forecast

Higher home prices are generally considered a favorable sign in the real estate business, but the extremely low supply has made housing unaffordable for a large part of the market – specifically first-time homebuyers. While home prices are up 48% from 2011, wage growth for the same period has only been 15%. Ken Rosen, chairman of Rosen Consulting Group, says the segment’s diminished home buying ability is unhealthy, given that homeownership plays an important role in economic growth.

NAR chief economist Lawrence Yun says one of the reasons for the housing shortage is the slow pace of new home construction in recent years. For 2018, Yun forecasts an increase of 9.4% in new home starts or an estimated total of 950,000 – but this is still below the national average of 1.2 million starts. It’s also forecasted that existing home prices will increase 4.9% in 2018, while new home prices will remain the same.

Yun and Rosen also cautioned about the effects of a potential overhaul of the American tax code to home prices and home sales. The bill filed by the House Ways and Means Committee will essentially abolish homeownership incentives for almost 95% of homeowners.