Home Inventory Continues to Grow as Sales Decline 6% Year over Year
U.S. home-sale prices increased 4.5 percent in October compared to a year ago, to a median of $297,200. October’s year-over-year price increase marks a return to an overall healthy level of price growth after posting a 6.5-year low level of growth in September. Home prices typically decline from September to October, having fallen by an average of 1 percent between the two months over the previous eight years. This October however, prices increased nationally 2.4 percent month over month. Despite this national increase, just 32 of the 71 largest metro areas Redfin tracks saw home prices increase from September to October, which suggests that the monthly gain is due to the share of homes selling last month shifting slightly to more expensive areas rather than individual homes increasing in value.
However, evidence that the market is cooling down can be seen in price drops. In October 31.3 percent of homes for sale had at least one price drop of more than 1 percent. This is the highest share of price drops on record since Redfin began tracking this metric in 2010, and 6.3 percentage points above last October’s level of 25 percent. In Seattle, almost half of homes for sale had price drops, with an average price cut of $27,500, down from more than $30,000 a year earlier.
The number of homes for sale was up 1.3 percent from a year earlier. This was the highest level of inventory growth since September 2015. National inventory growth continues to be driven by big increases in softening coastal markets like San Jose (110.9%), Seattle (73.2%), San Diego (38.2%), and Boston (17.3%).
|Market Summary ||October 2018 ||Month-Over-Month ||Year-Over-Year |
|Median sale price ||$297,200 ||2.4% ||4.5% ||....................................................................................................... |
|Homes sold ||219,000 ||-1.6% ||-5.7% || |
|New listings ||263,700 ||1.0% ||5.4% |
|All Homes for sale ||720,100 ||-3.3% ||1.3% |
|Median days on market ||43 ||3 ||-2 |
|Months of supply ||3.3 ||0 ||0.2 |
|Sold above list ||20.3% ||-1.7% ||-2.6% |
|Median Off-Market Redfin Estimate ||$299,800 ||-2.4% ||8.3% |
|Average Sale-to-list ||97.9% ||-0.2% ||-0.1% |
The number of homes newly listed in October rose 5.4 percent year over year, but the number of completed home sales continued to sink, dropping 5.7 percent from 2017. Home sales declined in 59 of the 71 largest metro areas that Redfin tracks.
Metro areas like Seattle, San Diego and San Jose, where high home prices mean that rising mortgage rates have the largest effect on affordability, are seeing the biggest increases in inventory coupled with decreasing sales. As of last week, the average interest rate for a 30-year fixed-rate mortgage had increased to a seven-year high of 4.94 percent. The biggest sales declines were in some of the most expensive metros, including Seattle (-19.6%), San Diego (-15.7%), and Honolulu (-22.9%).
“An increase in interest rates effectively makes home-buying more expensive because buyers have to pay higher monthly mortgage payments even if the sticker price hasn’t changed,” said Redfin chief economist Daryl Fairweather. “Some homebuyers are adjusting their price range down, and others are backing out of home-buying entirely–deciding that renting is a better deal. Sellers are now realizing buyer demand isn’t what it used to be and are dropping their prices. When buyers and sellers are on the same page, the market moves quickly, but since sellers were slow to react, we’ve seen a slowdown in the housing market.”
Across Redfin metros, the typical home that sold in October went under contract in a median of 43 days, two days faster than last year. This October, 20.3 percent of homes sold above the list price, down from 22.9 percent last October. The share of homes that went under contract within two weeks also fell, from 23.6 percent last October to 21.3 percent this October.
“Another factor we’re watching closely as we examine national housing market trends going into the end of the year is the devastation of the California wildfires,” Fairweather continued. “While the fires are disrupting many Californians lives and therefore any immediate home-buying plans, we’re already hearing from Redfin agents in Southern California that they expect homeowners and homebuyers to be resilient as they have in the face of past natural disasters, with renewed commitment to rebuilding and picking up where they left off with a home search. The fact is that rising mortgage rates and high home prices have a bigger long-term effect on the local housing market than the fires’ destruction.”
Other October Highlights
Boston was the fastest market, with half of all homes pending sale in just 15 days, down from 14 days from a year earlier. Grand Rapids, MI and San Francisco were the next fastest markets with 16 and 17 median days on market, followed by Oakland, CA (17) and Omaha, NE (17).
The most competitive market in October was San Francisco where 72.5% of homes sold above list price, followed by 55.6% in Oakland, CA, 55.4% in San Jose, CA, 39.2% in Boston, and 38.8% in Buffalo, NY.
Knoxville, TN had the nation’s highest price growth, rising 16% since last year to $203,000. Grand Rapids, MI had the second highest growth at 12.8% year-over-year price growth, followed by San Jose, CA (11%), Las Vegas (10.8%), and Kansas City, MO (10.5%).
4 metros saw price declines in October including Honolulu (-8.6%), Baton Rouge, LA (-0.5%), Montgomery County, PA (-0.5%), and Hampton Roads, VA (-0.3%).
2 out of 71 metros saw sales surge by double digits from last year. Birmingham, AL led the nation in year-over-year sales growth, up 14.2%, followed by Louisville, KY, up 13.6%. New Orleans rounded out the top three with sales up 7.8% from a year ago.
Honolulu saw the largest decline in sales since last year, falling 22.9%. Home sales in Seattle and Rochester, NY declined by 19.6% and 16.0%, respectively.
San Jose, CA had the highest increase in the number of homes for sale, up 111% year over year, followed by Seattle (73%) and Oakland, CA (42%).
Philadelphia had the largest decrease in overall inventory, falling 24.7% since last October. Montgomery County, PA (-24%), New Orleans (-23%), and Camden, NJ (-21%) also saw far fewer homes available on the market than a year ago.
The median list price-to-Redfin Estimate ratio was 94.6% in San Francisco, CA, the lowest of any market. This indicates the typical home for sale in October was listed at a price 90.5% of its estimated value. Only 9.5% of homes in San Francisco, CA were listed for more than their Redfin Estimate.
Conversely, the median list price-to-Redfin Estimate ratio was 102.3% in Miami, FL and 102.2% in West Palm Beach, FL, which means sellers are listing their homes for more than the estimated value in those metro areas. In Miami, FL, 82.7% of homes were listed above their Redfin Estimate, the highest percentage of any metro.
Below are market-by-market breakdowns for prices, inventory, new listings and sales for markets with populations of 750 thousand or more. For downloadable data on all of the markets Redfin tracks, visit the Redfin Data Center.
EDITOR’S NOTE: The Washington, D.C. and Baltimore metro areas were excluded from this report and analysis due to data accuracy issues. The issues stem from problems with the listings information that Redfin receives from the MLS. Redfin engineers are working with the MLS to resolve the issue, which does not impact the ability to view homes for sale in the Washington and Baltimore metro areas on Redfin.com.
Median Sale Price
|Redfin Metro||Median Sale Price||Month-Over-Month||Year-Over-Year|
|Redfin Metro||Homes Sold||1,961||
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