Conditions are shaping up for a highly competitive spring homebuying season as prices rise with inventory declining
Conditions are shaping up for a highly competitive spring homebuying season as prices rise with inventory declining.
Data from Redfin shows a 7.8% rise in prices in January compared to a year earlier, with a median sale price of $280,500 across the markets where the firm operates.
Sales were down 7.9% year-over-year while the inventory of available homes slumped 14.4% from a year earlier, the largest year-over-year decline in 28 consecutive months of lower inventory.
"Sales volume is typically lowest in January, so while sales fell further than normal, it is not a major cause for concern," said Redfin senior economist Taylor Marr. "Redfin agents in high-tax states reported that some buyers were hesitant in November and December given the uncertainty around tax reform, which passed in late December. This uncertainty contributed to the drop in January home sales."
Homes sold 6 days faster in January than a year earlier with average days on market of 53. More than 19% of homes sold for above list and the average sale to list price ratio up slightly at 97.8%.
The fastest-selling market was San Jose where homes were under contract in 12 days on average; down from 42 days a year earlier.
Buyers weighing mortgage rate rises
With interest rates rising, move-up buyers are considering their options. Should they list now amid higher rates and potentially less-favorable tax treatment for their new home; or wait until their personal tax cuts offset the negatives.
“Many buyers are concerned about interest rates, but the biggest driver of this market is inventory, not rates," said Redfin Washington, D.C., agent Joe Krupsaw. "None of my clients have said they'll change their plans to buy if rates increase. I think when rates hit 4.5 percent we'll see some buyers reassess their budgets and what they can afford, but they won't stop looking for a home."
