Cornflakes and milk may or may not be getting more expensive, but some higher-profile things are rocking like it’s 1979. Houses, for example:
Home prices just took the biggest jump in four years
(CNBC) – Homebuyers, hold onto your wallets. The gains in home prices are getting bigger as the supply of homes for sale gets leaner.
The median price of a home sold in March surged 8.9 percent compared with March 2017, according to Redfin, a real estate brokerage. It is the biggest annual increase in four years. Redfin tracks prices in 174 local markets and calculated the median home price at $297,000.
High prices are the result of very, very low inventory. The supply of homes for sale was down 11.9 percent in March, compared with a year ago. As a result, sales fell 3.7 percent. The number of new listings in March dropped 5.6 percent annually, although part of that may have been due to the Easter holiday falling early this year.
“Sellers are slow to list this year and we aren’t seeing enough new construction homes to fill the gap,” said Redfin’s chief economist, Nela Richardson. “If we don’t see the new listings number turn around next month or a pickup in new housing starts, inventory will be a persistent drag on sales for the remainder of the year.”
Buyer demand is still strong, despite higher prices. Sellers are pulling back, however, likely worried they won’t be able to find anything else they like or can afford. The average home went under contract in 43 days in March, more than a week faster compared with a year ago and a March record. Nearly a quarter of the homes sold for more than their list prices.
Large metropolitan markets in California, as well as Seattle and Denver, continue to see big price gains, but some unexpected markets are also seeing inflation, as well. Markets like Allentown, Pennsylvania (21.8 percent), Detroit (20.6 percent) and Las Vegas (16.5 percent) are not far behind.
The supply situation is acute in Washington, D.C., where inventory fell 22 percent in March annually, according to Long & Foster Real Estate. It would take just 1.8 months at the current sales pace to exhaust the supply. A balanced market supply is considered to be about six months.