In October home sale prices climbed 4.5%, however the percentage of listings that had a price drop of more than 1% reached an 8-year high, according to new data from Redfin.
This October, home sale prices reached a median of $297,200, increasing 2.4% from the previous month, Redfin explained.
Redfin also reported that 32 of the 71 largest metro areas saw home price increase from September, attributing this growth to home sales shifting to more expensive areas, rather than individual homes increasing in value.
“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,” Redfin Chief Economist Daryl Fairweather said. “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,” Fairweather continued.
According to Redfin’s analysis, 31.3% of listings had at least one price drop of more than 1%, reaching an 8-year high. This is 6.3 percentage points above October 2017’s level of 25%.
Notably, the number of homes for sale increased 1.3% from 2017, reaching the highest level of inventory growth since September 2015.
The U.S. Census Bureau announced that residential construction spending was at a seasonally adjusted annual rate of $556.4 billion in September, 0.6% above the revised August estimate of $553 billion.
Redfin explains national inventory growth was championed by “softening” coastal markets including San Jose, Seattle, San Diego and Boston.
This is the amount of inventory growth in these metros:
- San Jose increased 110.9%
- Seattle increased 73.2%
- San Diego increased 38.2%
- Boston increased 17.3%
Furthermore, the number of homes newly listed in October also increased, rising 5.4% year-over-year. Despite this, the number of completed home sales plummeted, falling 5.7% from 2017.
It’s also worth noting that home sales declined in 59 of the 71 largest metros, according to Redfin.
Fairweather said that for the remainder of 2018, Redfin will examine how the California wildfires impact national housing market trends.
“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,” Fairweather said. “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.”
As of today, the most recent California wildfires have claimed the lives of 63 people and destroyed more than 135,000 acres. You can read more about the devastation here.
