The median home sale price climbed 11% year over year for the week ending July 26 to a record-high $315,000, according to the latest market report from Redfin (www.redfin.com), the technology-powered real estate brokerage. This was the largest increase in sale prices recorded since early 2014.
The strong price growth is a result of strong homebuyer demand, which is 27% higher than it was in January and February before the pandemic took hold, according to Redfin’s seasonally-adjusted Homebuyer Demand Index. Homebuyers are bidding up prices as they compete for a limited number of homes for sale. In the four weeks ending July 26, new listings were down 0.7% year-over-year and active inventory of homes for sale was down 30%. The median sale-to-list price ratio rose to 99.0%—the highest level in at least six years.
“One of the first things I have to do with many of my buyers here in Houston is educate them on the reality that most houses are selling for more than asking,” explained Redfin agent Melanie Miller. “You can’t wait around for a price drop. Rather, homes that are priced right are receiving offers at or above full price within three days of being listed, so serious buyers need to be ready to act quickly.”
Sellers continue to reach high with their prices; the median asking price of homes for sale in the last four weeks was up 14% from a year earlier. Even as list prices turn in double-digit growth from 2019, buyers are still paying up.
“The shortage of homes for sale makes people think ‘maybe I should wait until things get cooler’, but unless we start to see a huge surge of new listings, things aren’t going to cool down much,” said Salt Lake City Redfin agent Campbell Dosch. “Even new construction is selling out faster than it is being built. The shortage has extended into rentals too. A lot of people are living with family and friends now because it’s too hard to enter the market.”
Pending Home Sales Still Turning in Strong Gains
Pending sales were up 12% year over year in the four weeks ending July 26. While the year-over-year comparisons of homebuying demand have only gotten stronger, there’s some evidence pending sales peaked in early July. Pending sales have slowed very slightly week-over-week for the past three weeks and are now about 2% lower than they were for the week ending July 5. That’s less of a dip than the typical seasonal slowdown between the first week of July to the last.
Expiration of Unemployment Benefits Could Impact Housing
Although the housing market has so far been one of the most resilient parts of the U.S. economy, that strength is now facing a test as enhanced unemployment benefits passed as part of the CARES Act expired at the end of July and there is no current agreement on whether or how to extend them.
“The economic pain of the pandemic has so far mostly been borne by those with lower incomes who were not as likely to be participating in the for-sale housing market,” said Redfin chief economist Daryl Fairweather. “However, the expanded unemployment benefits being given to these workers has helped to keep the overall economy on stronger footing during a very uncertain time. One example of this is that the money has helped boost retail sales back to pre-pandemic levels. Without as much assistance to the millions of Americans who have lost their jobs during this recession, the impact could ripple outward and begin to affect sectors such as housing.”
To view the full report, including charts, outlook and methodology, please visit: https://www.redfin.com/blog/home-price-increase-hits-new-high
Redfin (www.redfin.com) is a technology-powered residential real estate company, redefining real estate in the consumer’s favor in a commission-driven industry. We do this by integrating every step of the home buying and selling process and pairing our own agents with our own technology, creating a service that is faster, better and costs less. We offer brokerage, iBuying, mortgage, and title services, and we also run the country’s #1 real estate brokerage search site, offering a host of online tools to consumers, including the Redfin Estimate. We represent people buying and selling homes in over 90 markets in the United States and Canada. Since our launch in 2006, we have saved our customers over $800 million and we’ve helped them buy or sell more than 235,000 homes worth more than $115 billion.
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