Housing Market Sees Record May
Spring is typically the busiest season for buying and selling homes, and this spring was no different. According to research by Redfin, speed and competition hit new highs in May, as limited housing inventory continues to cause home price appreciation and shorten the time on the market.
Redfin reports home prices increased 6.8% nationwide, and home sales increased 7.5% year-over-year. Available homes for sale continued to decline, down 10.9% to a supply of 2.7 months, the lowest level since Redfin’s inaugural survey in 2010. In May, the average home went under contract in under 37 days, breaking the 40-day record set in April. Over 25% of homes are selling at or above the listed price.
Demand for homes is outpacing supply for several reasons, including labor shortages. Home builders are struggling to fill positions. National Association of Home Builders chief economist Rob Dietz explained, “We thought we’d see a flow back of workers from the energy sector. The labor shortage has basically grown and accelerated. It’s the top challenge in the building industry right now.”
Redfin chief economist Nela Richardson stated, “There is still a lot of momentum in home prices in many metros, not only on the coasts but also in places like Buffalo, Grand Rapids and Omaha. Strong local economic growth and burgeoning demand from older Millennials are accelerating home-price growth in this very competitive, low-inventory pre-summer market.”
Housing professionals expect last week’s rate hike to not significantly impact buyer demand. Many would-be buyers may choose to purchase now before additional rate hikes take place.
Sources: CNBC, HousingWire