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November 23, 2014

High-Priced Properties Drive Housing Recovery

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High-Priced Properties Drive Housing Recovery

Sales growth is strongest among homes in the highest home tiers, according to a new analysis of housing data from the National Association of REALTORS®. Homes in the above-median-priced categories are outselling homes in the lower-priced tiers. 

Over the past year, more than 11 percent of homes sold were priced at over $500,000.

A big variation exists among regions for median prices. The median price reflects half of the homes in an area that sold at a higher price and half of the homes that sold at a lower price than the median. 

One explanation behind the trend of pricier homes outselling lower priced homes is that “home sales are shrinking in the lowest price tier -- most likely a result of limited inventory in this price range as would be expected in a housing market where prices are rising,” says Danielle Hale, a research economist at NAR. 

Sales in the lowest price range fell by more than 7 percent nationwide. On the other hand, sales in higher-priced tiers rose more than 30 percent in September compared to year ago levels, Hale notes. 

An expected decrease in distressed sales in the months ahead could mean even smaller inventories of lower-priced homes for sale compared to high-priced homes. That would “mean continued upward pressure on the median price of homes compared to one year ago until inventories help relieve some of this pressure.”

Source: “Pricier Properties Lead the Recovery,” Real Estate Economy (Oct. 28, 2013)

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