June Home Prices Rose 5.7% Year Over Year; Smallest Increase Since December 2016

Inventory Declines Continue to Moderate; Number of Homes for Sale in June Down Just 6% Compared to June 2017

Seattle, WA – July 24, 2018 (PRNewswire) (NASDAQ: RDFN) U.S. home-sale prices increased 5.7 percent year over year in June to a median of $312,700, according to Redfin (www.redfin.com), the next-generation real estate brokerage. This is the lowest price growth since December 2016. At the same time, the number of homes for sale in June was down just 6 percent year over year, which continues the gradual easing of year-over-year inventory declines since January of this year.

Redfin Logo

Homes sales fell 3.3 percent in June compared to June 2017. However, it’s important to note this is partially due to the fact that June 2017 had five Thursdays, a common day for home purchases to close, compared to this June, which had just four. If June 2017 did not have the fifth Thursday, year-over-year homes sales would be up by 1.2 percent.

Homes also sold at their fastest pace on record, a median 34 days in June, unchanged from May and three days faster than last year.

Notably, in what have been the most competitive places for homebuyers, inventory is increasing, providing welcome relief for some buyers. The number of homes for sale in June increased by double digits in Portland (31.6%), San Jose, CA (11.9%) and Seattle (24.2%). These markets also experienced sales declines of 9.6 percent, 16.3 percent and 10.1 percent, respectively.

“The affordability crisis may have reached a breaking point in Portland, San Jose and Seattle,” said Redfin CEO Glenn Kelman. “After 75 straight months of price increases in these markets that far outpaced wage growth, homebuyers are now becoming selective about which homes to buy, and at what price. The homes that did sell in June still sold quickly, but buyers were significantly more likely to reject homes that were less desirable or aggressively priced by the seller: the percentage of listings in these markets that sold within two weeks declined in June from 61 percent to 52 percent, and the fraction of listings that dropped their price increased from 31 percent to 33 percent.”

“We’ve seen similar signs of buyer fatigue in the past, especially at this point in the season,” Kelman continued. “But in this case the lull has lasted a bit longer and affected more markets than in the recent past. It’ll be interesting to see whether buyers adjust to the latest price increase and come back in force this fall, or if instead we see these markets shift more in favor of buyers.”

“Buyers are taking advantage of the inventory windfall,” said Shoshana Godwin, a Redfin agent in Seattle. “A handful of my buyers who had been sitting out the market for over a year have, over the last two months, gotten homes under contract. We targeted homes that were still on the market after their offer review date and were able to include most offer contingencies, including the inspection. That’s been virtually unheard of in Seattle for the past few years.”

Redfin will be paying close attention in the coming months to the data and to its agents’ observations to see if the trends in Portland, San Jose and Seattle continue, progress or show up in other markets.

Other June Highlights:

Speed

  • Competitiveness eased in Seattle in terms of the portion of homes selling above asking, down 7.3 percentage points year over year from 62.1% to 54.8%. However, it was still the fastest market, with a sale pending on half of all homes in just seven days, keeping pace with June of last year. It’s important to note that the homes that sold, sold quickly. But more homes stayed on the market, hence the rise in inventory. Denver, Omaha, NE, Tacoma, WA and Grand Rapids, MI were the next fastest markets with eight median days on market each.

Prices

  • San Jose, CA had the nation’s highest price growth, rising 22.4% since last year to $1,225,000. Las Vegas had the second highest growth at 12.8% year-over-year price growth, followed by Oakland, CA (11.9%), Cincinnati (11.4%), and Seattle (11.4%).
  • No metros saw price declines in June.

Sales

  • Just three out of 73 metros saw double-digit sales growth compared to last year. Camden, NJ led the nation in year-over-year sales growth, up 52.4%, followed by Pittsburgh, PA, up 10.4%. Long Island, NY rounded out the top three with sales up 10% from a year ago.
  • Oxnard, CA saw the largest decline in sales since last year, falling 25.6%. Home sales in San Jose, CA and West Palm Beach, FL declined by 16.3% and 15.1%, respectively.

Inventory

  • Baton Rouge, LA had the highest increase in the number of homes for sale, up 51.1% year over year, followed by Portland, OR (31.6%) and Seattle (24.2%).
  • Rochester, NY had the largest decrease in overall inventory, falling 33.3% since last June. Indianapolis (-30.3%), Buffalo, NY (-30.0%), and Milwaukee (-24.2%) also saw far fewer homes available on the market than a year ago.

Redfin Estimate

  • The median list price-to-Redfin Estimate ratio was 93.2% in San Francisco, the lowest of any market. This indicates the typical home for sale in June was listed at a price below its estimated value. Only 6.3% of homes in San Francisco were listed for more than their Redfin Estimate.
  • Conversely, the median list price-to-Redfin Estimate ratio was 102.3% in Miami, FL and 102.1% 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, 83.4% of homes were listed above their Redfin Estimate, the highest percentage of any metro.

To read the full report, complete with charts and market-level data, please visit: www.redfin.com.

About Redfin

Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country’s #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the automated home-value estimate with the industry’s lowest published error rate for listed homes. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $60 billion in home sales.

Tom Ferry Discusses Real Estate Pricing Strategy and Price Reduction Conversations

What do you do when your listing isn’t getting any attention? According to Tom there’s only one reason: It’s not priced correctly. The homeowners want answers. But the market has spoken.

What now? How do you get those homeowners to see the writing on the wall? In this edition of the Tom Ferry Show Tom answers this question and gives you the exact script to get that much-needed price reduction. He also shows you how to avoid the situation in the future by getting the home priced correctly from the start.

California Median Home Price Sets New Record as Home Sales Dial Back in May, C.A.R. Reports

– Existing, single-family home sales totaled 409,270 in May on a seasonally adjusted annualized rate, down 1.8 percent from April and down 4.6 percent from May 2017.

– May’s statewide median home price was $600,860, up 2.8 percent from April and 9.2 percent from May 2017, hitting a new high for the first time in more than 10 years.

– Homebuyers in San Francisco County paid an average of 18 percent higher than asking price, as the average price per square foot in the county reached more than $1,000.

Los Angeles, CA – June 19, 2018 (PRNewswire-USNewswire) California’s median home price reached a new high in May, while home sales retreated both on a monthly and annual basis, wiping out most of the gains posted for the year, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

CAR Logo

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 409,270 units in May, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the May pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

May’s sales figure was down 1.8 percent from the revised 416,750 level in April and down 4.6 percent compared with home sales in May 2017 of 428,870. May marked the first year-over-year sales decline in four months and the lowest sales level in more than a year.

“The softening in May home sales was due in part to the spike in interest rates in mid-April, when the 30-year fixed mortgage rate jumped 20 basis points in just one week to reach the highest level since 2014,” said C.A.R. President Steve White. “Homebuyers may have postponed escrow closings to wait out the effects of the rate surge. Additionally, the specter of rate increases earlier in the year may have pulled sales forward into the first quarter, which resulted in the subpar performance in the last couple of months. Looking ahead, higher mortgage rates and elevated home prices will heighten affordability constraints that will likely temper the housing market in the coming months.”

For the first time in 11 years, the statewide median home price surpassed its previous peak price of $594,530, which was recorded more than 10 years ago during the last housing boom. The May statewide median price was $600,860, up 2.8 percent from a revised $584,460 in April and up 9.2 percent from a revised $550,230 in May 2017. The year-over-year price growth pace was the highest rate of growth since May 2014.

The statewide median price per square foot rose to $286 in May, the highest figure since November 2007, and marks “real” growth in home values rather than a shift in the market toward sales of larger or higher-end homes. However, with the Bay Area outperforming the rest of the state, there is undoubtedly some pressure on the median price as the Bay Area made up a larger share of home sales.

“As we predicted last month, California’s statewide median home price broke the previous pre-recession peak set in May 2007 and hit another high as tight supply conditions continued to pour fuel on the price appreciation fire,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “With inventory starting to show signs of improvement, however, home price appreciation could decelerate in the second half of the year, especially since further rate increases are expected to hamper homebuyers’ affordability and limit how much they are willing to pay for their new home.”

Other key points from C.A.R.’s May 2018 resale housing report include:

  • On a regionwide, non-seasonally adjusted basis, only the San Francisco Bay Region recorded both solid month-to-month and year-over-year sales gains. Sales in the Bay Area rose 17.3 percent monthly and 2.1 percent annually. Sales in the Inland Empire increased 7.6 percent from April and was down 5.0 percent from a year ago. The Los Angeles metro region experienced a 12.6 percent monthly sales jump but was down 5.6 percent annually.
  • The Bay Area Region, which has recorded annual sales increases for the past four months, continued to lead the state in home sales. Five of nine Bay Area counties posted year-over-year sales gains – with San Francisco increasing by double-digits – while Napa, Sonoma, Santa Clara, and Solano counties experienced annual sales declines.
  • The Central Valley Region maintained its momentum for the fifth consecutive month as regionwide sales experienced a slight 0.9 percent improvement and nine of 12 counties in the region performed better than the previous year. Three counties – including Glenn, Kern, and San Benito – posted double-digit increases, but their gains were mostly offset by the losses of San Joaquin, Placer, and Stanislaus.
  • The Southern California Region continued to lag the state. Overall sales in the region declined by 5.8 percent compared to a year ago, and sales in five of the six counties dropped on a year-over-year basis. Sales in Riverside County declined the most, followed by Orange County, and San Diego. Only San Bernardino County recorded an annual sales gain.
  • The bottom end of the market continued to bear the brunt of the housing shortage as the availability of homes priced under $200,000 declined by 28.7 percent on an annual basis, and those priced between $200,000 and $299,999 dropped 13.1 percent. On the other hand, inventory of properties priced $1 million and above increased by more than 18 percent. In general, supply constraints continue to limit sales in market segments priced below $500,000, but higher-priced properties continue to show modest to strong growth in sales in the recent month.
  • Home prices in the Bay Area remained robust in May, with the region’s median price spiking 16.4 percent from $935,000 in May 2017 to $1,088,000. In fact, the median price for the region remained above the $1 million benchmark for the second straight month and set a new record high. Five of the nine counties in the region had a median price above $1 million in May 2018, with Alameda becoming the latest member to join the million-dollar club ($1,025,000). Other million-dollar club members include San Francisco ($1,620,000), San Mateo ($1,600,000), Marin ($1,415,000) and Santa Clara ($1,400,000). Home prices increased in all nine counties on a year-over-year basis, and prices in three counties climbed by more than 10 percent.
  • Home prices in Southern California were more tepid by comparison, but still showed a steady upward trend. Prices in San Bernardino and Los Angeles increased the most with near double-digit growth rates, while prices throughout the rest of the region grew at a more modest rate ranging between 4.6 percent and 5.8 percent.
  • The number of statewide active listings improved for the second consecutive month, increasing 8.3 percent from the previous year. The year-over-year increase was the largest since January 2015, when active listings jumped 11.0 percent. Perhaps more homeowners are listing their homes for sale in an effort to cash out on recent home price surges. The increase in active listings was also partly due to the sales decline, which led to a boost in inventory.
  • As sales declined from a year ago, the unsold inventory index, which is a ratio of inventory over sales, increased on a year-over-year basis as well. The statewide unsold inventory index edged up to 3.0 months in May from 2.9 months in May 2017. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
    v

  • The median number of days it took to sell a California single-family home remained low at 15 days in May compared with 14 days in May 2017.
  • C.A.R.’s statewide sales price-to-list price ratio* was 100 percent in May, unchanged from May 2017.
  • The average statewide price per square foot** for an existing, single-family home statewide was $286 in May, up from $268 in May 2017.
  • Mortgage rates have been on the rise since breaking the 4.0 percent barrier in January. The 30-year, fixed-mortgage interest rates averaged 4.59 percent in May, up from 4.47 percent in April and from 4.01 percent in May 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also perked higher in May to an average of 3.79 percent from 3.66 percent in April and from 3.12 percent in May 2017.

Graphics (click links to open):

Note: The County MLS median price and sales data in the tables are generated from a survey of more than 90 associations of REALTORS® throughout the state and represent statistics of existing single-family detached homes only. County sales data are not adjusted to account for seasonal factors that can influence home sales. Movements in sales prices should not be interpreted as changes in the cost of a standard home. The median price is where half sold for more and half sold for less; medians are more typical than average prices, which are skewed by a relatively small share of transactions at either the lower-end or the upper-end. Median prices can be influenced by changes in cost, as well as changes in the characteristics and the size of homes sold. The change in median prices should not be construed as actual price changes in specific homes.

* Sales-to-list price ratio is an indicator that reflects the negotiation power of home buyers and home sellers under current market conditions. The ratio is calculated by dividing the final sales price of a property by its last list price and is expressed as a percentage. A sales-to-list ratio with 100 percent or above suggests that the property sold for more than the list price, and a ratio below 100 percent indicates that the price sold below the asking price.

** Price per square foot is a measure commonly used by real estate agents and brokers to determine how much a square foot of space a buyer will pay for a property. It is calculated as the sale price of the home divided by the number of finished square feet. C.A.R. currently tracks price-per-square foot statistics for 50 counties.

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Chart

Chart