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Home-Price Growth Slows in Many Metro Areas during First Quarter

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Restrictive mortgage credit remains an unnecessary headwind for the housing market, but NAR is also concerned about costly mortgage insurance fees imposed on Federal Housing Administration-backed home loans that have more than doubled since 2010, pricing out as many as 125,000 to 375,000 buyers, Brown added. When you combine the increases in home prices and interest rates with record-high premiums, home purchases are becoming increasingly out of reach for many qualified borrowers who rely on FHA financing.

Outside of these market headwinds, a separate breakout of qualifying incomes to purchase a median-priced existing single-family home on a metropolitan area basis demonstrates sufficient buying power in the majority of metro areas. Income requirements are determined using several scenarios on downpayment percentages and assume 25 percent of gross income devoted to mortgage principal and interest at a mortgage interest rate of 4.4 percent.

The national median family income4 was $64,500 in the first quarter. However, to purchase a home at the national median price, a buyer making a 5 percent downpayment would need an income of $44,200. With a 10 percent downpayment the required income would be $41,800, while with 20 percent down, the necessary income is only $37,200.

In the condo sector, metro area condominium and cooperative prices ¬ covering changes in 59 metro areas ¬ showed the national median existing-condo price was $191,400 in the first quarter, up 10.8 percent from the first quarter of 2013. Fifty metros showed increases in their median condo price from a year ago, and nine areas had declines.

Regionally, total existing-home sales in the Northeast fell 10.2 percent in the first quarter and are 6.8 percent below the first quarter of 2013. The median existing single-family home price in the Northeast was $239,300 in the first quarter, up 2.2 percent from a year ago.

In the Midwest, existing-home sales dropped 11.5 percent in the first quarter and are 10.5 percent below a year ago. The median existing single-family home price in the Midwest increased 6.7 percent to $144,000 in the first quarter from the same quarter a year ago.

Existing-home sales in the South declined 3.6 percent in the first quarter and are 0.7 percent below the first quarter of 2013. The median existing single-family home price in the South was $168,900 in the first quarter, up 7.7 percent from a year earlier.

In the West, existing-home sales fell 6.0 percent in the first quarter and are 12.4 percent below a year ago. The median existing single-family home price in the West jumped 14.0 percent to $282,100 in the first quarter from the first quarter of 2013.

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