The national median home price grew 11 percent year over year to $328,400, according to Redfin’s latest market report published on Thursday.
Redfin lead economist Taylor Marr said booming buyer demand due to low mortgage rates and continuing supply constrictions are responsible for the largest annual increase since February 2014.
“The supply of homes is tighter than ever and home prices are growing at the fastest rate in years. Why isn’t this historic seller’s market holding back buyers?” Marr said in a press release. “Homeowners are just now deciding to sell; they were just a little late to the game.”
“These new listings have supplied buyers with homes to purchase,” Marr added. “High prices almost always eventually draw sellers to market and with record low rates, trading out your home for a new mortgage can be more attractive than refinancing.”
All of the 85 metropolitan statistical areas Redfin tracks experienced an annual increase in median home prices, with Bridgeport, Connecticut (+30.7 percent); Memphis, Tennessee (+20.5 percent); and Tulsa, Oklahoma (+19.8 percent) leading the way. New York City experienced the smallest annual increase at 2.7 percent.
As Marr explained, the sharp increase in August median home prices is due to a 22 percent year-over-year decline in active listings matched with a 10.2 percent increase in home sales.
Only San Francisco (+75 percent) and New York City (+10 percent) experienced an increase in seasonally adjusted active listings, which Redfin said is due to buyers and sellers looking to live elsewhere as work-from-home policies expand their search.
On the other hand, smaller, secondary cities such as Allentown, Pennsylvania (-55.0 percent); Kansas City, Missouri (-53.0 percent) and Salt Lake City (-50.5 percent) have a dearth of active listings.
Despite a decline in active listings, the seasonally adjusted home sales pace increased 10.2 percent in August. Fifty-six of the 85 largest markets experienced a sales boost, with Bridgeport, Connecticut (+38.8 percent); Lake County, Illinois (+24.5 percent) and Chicago (+17.1 percent) leading the pack.
Meanwhile, multiple New York markets are still struggling to bounce back from the impact of COVID, as evidenced by the dramatic sales pace declines in Nassau County (-27.5 percent), Buffalo (-23.7 percent) and Rochester (-22.6 percent).
“Some of the growth in homes for sale is fueled by San Francisco and New York, where buyers aren’t as interested right now, but these are the exceptions,” Marr said. “In Seattle, new listings jumped 35 percent, fueling a 45 percent increase in pending sales.”
“The housing market is like a national game of musical chairs right now, where everyone wants to jump in now that remote work and low mortgage rates have changed the rules of the game,” he added.
Looking forward, Marr said the imbalance between supply and demand will continue, meaning the usually slow fall and winter homebuying seasons will be hotter than ever.
“The typical home that sold in August went under contract in 31 days—eight days less than a year earlier,” he explained in the report. “Typically by this time of year, homes spend more time on the market and the share of homes that sold above list price declines.”
“This year, both of these measures are defying seasonality, moving in the opposite direction from their typical pattern, indicating a seller’s market that is hotter than ever,” he continued. “But will the music soon stop? Can builders add more chairs if the cost of doing so is skyrocketing?”