Growing Demand and Low Supply Lift Home Prices, but Concerns Remain

A decade after the onset of the 2007 recession, the national housing market has, by many measures, returned to normal, according to the latest State of the Nation’s Housing report released by the Joint Center for Housing Studies of Harvard University. Housing demand, home prices, and construction volumes are all on the rise, and the number of distressed homeowners has fallen sharply. However, along with strengthening demand, extremely tight supplies of both for-sale and for-rent homes are pushing up housing costs and adding to ongoing concerns about affordability. At last count in 2015, the report notes, nearly 19 million US households paid more than half of their incomes for housing.

National home prices hit an important milestone in 2016, finally surpassing the pre-recession peak. Drawing on newly available metro-level data, the Harvard researchers found that nominal prices were up last year in 97 of the nation’s 100 largest metropolitan areas. At the same time, though, the longer-term gains in real prices varied widely across the country, with some markets experiencing home price appreciation of more than 50% since 2000, while others posted only modest gains or even declines. These differences have added to the already substantial gap between home prices in the nation’s most and least expensive housing markets.