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US home prices continue to rise

Residential property sales in the United States rose further in April despite rising prices and a decline in housing supply, the latest figures show.

Sales of existing homes increased by 1.7% last month to a seasonally adjusted annual rate of 5.45m, the National Association of Realtors said.

The greatest hike in property sales was recorded in the Midwest where sales jumped by 12.1% year-on-year, owed in part to the fact that the region offers the cheapest real estate in the country. Purchases also increased, albeit marginally, in the Northeast but fell in the South and West.

Improving economic conditions, historically low mortgage borrowing rates and a stable housing market have helped boost demand for housing. However, increasing property prices and fewer sales listings have limited the number of people who can afford to buy.

A shortage of sales listings is placing upward pressure in US property values, creating affordability pressures for some prospective purchasers. The volume of listings has dropped by 3.6% over the past 12 months. Prices have climbed so substantially in the West that sales volumes have actually declined from a year ago, evidence that buyers are priced out of the market where home values have constantly outdone wage gains.

The average price of a home sold in the USA was $232,500 (£180,127) in April, a rise of 6.3% year-on-year.

Higher property prices mean that the share of first-time buyers remains below the historic average of 40%, with the proportion of people acquiring their first ever home accounting for 32% of sales last month.

Despite the recent US housing market recovery, millions of homeowners in the USA remain in negative equity following the 2009 economic crash. 

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