Home prices gain in all U.S. cities
By Kathleen M. Howley
Bloomberg News Service
Mortgage rates at 45-year lows fueled price gains in all U.S. cities during the second quarter, the first time on record that no metropolitan areas had price declines, according to the National Association of Realtors.
Nationally, prices rose at a 7.4 percent pace in the second quarter, said NAR, a Washington-based trade group that tracks 126 cities. The year-over-year price increases ranged from a high of 24 percent in the areas around Riverside and San Bernardino, Calif., to a low of 0.1 percent in Phoenix.
The fastest U.S. home-price gains since the Carter administration has fueled speculation that the housing market is in a "bubble," in which price outpaces value.
While the low mortgage rates caused prices to jump in the second quarter, the market is expected to cool in the second half as rates rise, said David Lereah, chief economist for the NAR.
"It's a real eyebrow-raiser to see price growth in every U.S. city — we've never seen that before," Lereah said. "This should probably be the last hurrah for significant home-price appreciation, at least for awhile, because we're going to see the pace moderate."
In a separate report, the group said that sales of single-family, condominium and cooperatively owned apartments fell to a 6.69 million annual pace last quarter, the second-highest on record.
The pace in the first quarter was a revised 6.7 million, the highest since the group started tracking resales in 1981.
The average rate for a 30-year fixed mortgage fell to 5.21 percent in June, according to Freddie Mac, the second-largest U.S. mortgage buyer. By last week, it had risen to 6.34 percent.
U.S. home-price gains averaged 7.5 percent in the first six months of 2003, and will slow to about 5 percent in the second half, Lereah said. Annually, price growth probably will average 6 percent in 2003, compared with 7 percent last year, which was the fastest pace since 1980 when it was 12 percent, Lereah said.
Honolulu had a median sales price of $375,000.
The NAR doesn't provide an overall median price for the metropolitan areas it tracks.
