Most metro area home prices rising faster than inflation.

The median price of existing homes is rising faster than the overall rate of inflation in most areas of the country, according to the National Association of Realtors (NAR).

The association's fourth quarter metro area home price report, covering 132 metropolitan areas, shows 15 areas with double-digit annual increases in median existing-home prices and only 15 areas posting price declines. The majority of metro areas showed median re-sale price increases well above the overall rate of inflation, which was 2.1 percent during the fourth quarter; 76.7 percent of metro area median prices increased at a faster rate.

NAR President Sharon A. Millett said higher prices were expected, considering last year's record home sales activity. "The good news is home prices are staying at sensible levels in most areas of the country. Preserving good housing affordability conditions is key to maintaining a healthy and balanced housing market, especially for first-time homebuyers," she said. "A strong entry-level market is the key to a solid trade-up market, such as we see today."

The national median existing-home price was $131,000 during the fourth quarter, up 4.9 percent from the fourth quarter of 1997, when the median price was $124,800. The median is the midpoint - half the homes sell for less, while half sell for more. For all of 1998, the median price was $130,600, up 5.2 percent from $124,100 in 1997.

Fourth-quarter metro area median resale prices ranged from $70,900 in Waterloo-Cedar Falls, Iowa to $325,800 in San Francisco. Milwaukee was closest to the national median at $131,200.

The strongest price increase in the country was in Lansing-East Lansing, Michigan, where the median price of $102,800 was 15.5 percent higher than the fourth quarter of 1997. Next came the Davenport-Moline-Rock Island area of Iowa and Illinois, where the median price of $81,100 increased 13.3 percent from the fourth quarter of 1997. Third was Jackson, Mississippi, where the fourth quarter price of $98,400 rose 13.2 percent from a year ago.

Dr. Fred Flick, NAR's vice president of economic research, said much of the overall increase in home prices results from a greater mix of more expensive homes being sold. "Even so, there are some shortages of homes available for sale in many areas, and that is a factor in rising prices. Historically, we see price increases of one to two percentage points above inflation - now we're almost three points higher than the inflation rate," he said.

The strongest regional increase in the median existing-home price was in the Midwest, where the fourth-quarter price of $114,400 was 7.1 percent higher than the same period in 1997. In addition to having the two strongest increases in the country, six other Midwestern metros posted double digit price increases:

Kalamazoo, Michigan; Saginaw-Bay City-Midland, Michigan; Toledo; Waterloo-Cedar Falls, Iowa; Lincoln, Nebraska; and Detroit.

The median resale price in the Northeast was $148,200 during the fourth quarter, rising 2.9 percent from a year earlier. The Nassau-Suffolk area of New York experienced a 10.1 percent increase from the fourth quarter of 1997, with a median price of $179,500. Boston, at $214,900, was 9.7 percent above a year ago. Trenton, N J, with a median existing-home price of $139,500, was up 6.9 percent in the last year.

The National Association of Realtors, "The Voice for Real Estate," is the nation's largest professional association, representing more than 730,000 members involved in all aspects of the real estate industry.