May Home Prices Up 3.6%, the Largest Year-Over-Year Increase in 7 Months
Recent upticks in mortgage applications and home tours suggest that home price growth will strengthen this summer.
U.S. home-sale prices edged up again in May, growing 3.6 percent from a year ago to a median of $315,700 across the metros Redfin tracks. While this was the biggest annual home price increase in seven months, it fell far short of the 7.1 percent growth rate of a year earlier.
Only six of the 85 largest metro areas Redfin tracks saw a year-over-year decline in their median sale price, the biggest of which were a 6.0 percent drop in San Jose, a 2.5 percent dip in New York, and a 2.2 percent decline in Honolulu. All three of the other metros that saw price drops were in California: Orange County(-1.4%), Los Angeles (-0.8%) and Oakland (-0.7%).
”As mortgage rates have fallen this month, Redfin has seen upticks in the number of people wanting to talk with our agents about buying homes and the number going on home tours,” said Redfin chief economist Daryl Fairweather. “Recent surges in mortgage applications also reflect the impact low rates are having on homebuyer demand nationwide. We haven’t yet seen a commensurate increase in U.S. home sales, and I don’t expect sales to increase substantially in the long run. That’s because there still aren’t enough homes for sale for all of the people who want to buy homes. In May, inventory posted its smallest increase in eight months, and fewer new listings came on the market than last year. Low rates and rising prices will likely lure sellers onto the market this summer, but the lack of new construction will continue to hold back sales growth.”
Home sales were essentially flat in May, up 0.2 percent year over year. Forty-eight of the 85 metros tracked by Redfin saw an increase in sales from a year earlier.
The number of homes for sale as of the end of May was up 2.5 percent from the same time last year. This was the smallest year-over-year increase in home supply in eight months. The number of homes newly listed for sale last month fell 0.7 percent from a year earlier.
Nationwide, measures of competition are mixed, with some pointing toward a hotter market than a year ago and others indicating that the market has cooled.
On the “market is hotter” side, we have the median number of days on market, which dropped for homes sold in May, which fell to 36 days from 37 days a year earlier. This is the lowest days on market measured in any month of May since at least 2010 (as far back as we have recorded this measure nationally).
On the “market is cooler” side, there’s the share of homes for sale that has a price drop, which rose to 25.9 percent, up from 23.4 percent last year, and the highest rate of homes with price drops since last September’s record high. Also, the share of homes sold above list price is falling, to 24.4 percent in May from 28.0 percent last year. Still, last month’s rate of homes selling above list price was the highest since last August.