One measure of national home prices rose last month with a vigor not seen since the bubble days as the number of foreclosed homes and other distressed properties on the market shrank.
The median sales price for previously owned U.S. homes rose 12.3% annually in January to $173,600, the National Assn. of Realtors said Thursday. It was the 11th consecutive month of annual increases and the strongest such gain since November 2005.
In the West, the median price rose 26.6% over the year to hit $239,800 as sales fell.
A significant drop in housing inventory and a flood of investors flush with cash have played a significant role in bidding up the market in recent months, particularly in hard-hit markets such as the Inland Empire, Phoenix and Las Vegas.
The median home price is the point at which half of all homes sold for more and half for less. The median is susceptible to fluctuations in the types of homes selling -- meaning that the fewer foreclosures and other cheap properties in the mix, the better that figure is going to look.
“Some, but not all of the strengthening in prices merely reflects a shift in the mix away from sales of discounted 'distressed' homes -- from foreclosures and short-sales -- toward more traditional sales,” Jim O'Sullivan, chief U.S. economist for High Frequency Economics, wrote in an emailed analysis. “The bottom line: while up only modestly in January, the trend in home sales still looks up; with inventories down sharply, prices are rising as well.”
Nevertheless, sharp home price increases -- particularly in battered cities such as Phoenix and Las Vegas -- have raised concern among some economists that speculation could return to markets if double-digit gains continue.
According to the widely followed S&P/Case-Shiller indexes -- considered the most reliable read on home prices -- values jumped 22.8% in Phoenix and 10% in Las Vegas in a year, according to November data, the most recent available.
Economists are concerned that such increases could fuel a short-term mind-set. California cities are also on the upswing, according to the Case-Shiller data, with San Diego rising 8%, Los Angeles up 7.7% and San Francisco increasing 12.7%.
"It's been a real roller-coaster," Karl E. Case, one of the creators of that index recently told The Times. "And there is a danger of igniting it again."
But other economists have said that the big gains are nothing to fret about.
"With more than 10 million homeowners underwater, double-digit price increases are not worrisome," IHS Global Insight economists Patrick Newport and Stephanie Karol wrote in an analysis Thursday
According to the real estate association report on Thursday, home sales last month rose in every U.S. region but the West, which is experiencing an acute shortage of inventory. The real estate group said in its news release Thursday that "a seller’s market is developing."
The association represents real estate agents across the U.S. and compiles its data from various listing services nationally.
When examined on a seasonally adjusted basis, sales of previously owned homes were essentially flat over the prior month, up 0.4%, and up 9.1% from January 2012, the group said. U.S. homes sold at a seasonally adjusted annual rate of 4.92 million units last month.
Critically, housing inventory fell 4.9% from the prior month, with 1.74 million homes available for sale. That represents a supply of about four months at the current sales pace. Economists typically consider about six or seven months worth of supply to be a healthy amount.
“We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth,” warned Lawrence Yun, chief economist for the real estate group.
Sales of so-called distressed homes, a category that includes both foreclosures and short sales, accounted for 23% of all sales last month, down from 35% in January 2012.