Home prices have been accelerating for some time now in the U.S. but this time, the growth is broad and across several states, which is a reflection of a wider economic and housing market recovery.
According to the May 2014 National Housing Trend Report by Realtor.com, home prices rose on a general basis across the states and was less concentrated to certain areas. In May, the median asking price of a home was $214,900 across board, which is an 8 percent year-on-year increase.
The growth was spotted in all but eight of the 146 markets surveyed by realtor.com.
Below are the top five areas where home prices increased the most:
1. Stockton-Lodi, Calif. - Median price: $285,000; Year-over-year increase: 42.7%
2. Las Vegas - Median price: $186,085; Year-over-year increase: 24.1%
3. Houston - Median price: $245,000; Year-over-year increase: 23.1%
4. Reno, Nev. - Median price: $289,900; Year-over-year increase: 22.9%
5. Denver, Colo. - Median price: $349,900; Year-over-year increase: 20.7%
Experts attribute the growth in prices to still-tight inventory.
"Home prices are as high as they are because of low inventory spread across the nation, but we are not seeing the runaway pricing of last year. Nor is the situation exclusive to the hotbed markets of recent years," Steve Berkowitz, CEO of Move Inc., the operator of realtor.com told Realtormag.
However, the pace at which prices have been rising have slowed down since the start of 2014, which is a good sign. When home prices started increasing, it triggered another asset bubble alarm but economists explained that there was no need to worry. A slower pace of price increase will also boost affordability as the economy strengthens.
"That means that the housing market will avoid becoming overvalued, allowing the recovery in sales activity and housing starts to continue," Businessweek cited a research note by Capital Economics property analyst Paul Diggle.
In fact, the slow, much broader price growth has helped cushion the U.S. economy against "unexpected economic stress," according to a recent Fitch Ratings report.
