While home prices grew a moderate 4.3 percent year over year last month, sales surged 7 percent and inventory fell by nearly as much. These forces, combined with new technologies allowing buyers to see and make informed decisions about homes as soon as they hit the market, caused the pace of sales to accelerate to its fastest level on record.
The pickup in sales was widespread, as nearly a third of the markets Redfin tracks reported growth in the double digits. Affordable markets in the Midwest and the South led the surge in sales.
In Michigan, Detroit and Grand Rapids saw the number of homes sold surge by more than 50 percent from last year.
“Grand Rapids is inventory-starved, so every listing is like a feeding frenzy,” said Redfin agent Kent Selders. “Almost everything is selling immediately, even at higher price points.”
Tech migration from high-priced cities is a common driver of local demand in Grand Rapids among other affordable markets that saw sizeable increases in home sales this spring.
“We’re seeing an influx of buyers from places like San Francisco, Southern California, Seattle and Washington, D.C. Most new residents are lured by tech jobs and opportunities to work remotely,” said Selders. “Locals are watching prices rise, and many realize if they don’t buy soon, they’ll miss out while homes are still affordable. The result is incredible demand and rapid sales. Nothing like this has ever happened in Grand Rapids.”
Affordability is key to homebuyers this spring. In 26 of the 32 markets with double-digit sales growth, the typical home sold for less than the national median of $269,200. Meanwhile, expensive markets in the West continue to lag the nation. Sales grew by less than 1 percent from last year in Seattle, San Francisco, San Diego and Riverside, California—and fell in Los Angeles, Portland, Denver and Sacramento.
Also making an impact among spring buyers were rock-bottom 30-year mortgage rates, which reached three-year lows this spring, at 3.6 percent.
“Move-up buyers have specifically noted they are buying now to take advantage of still-low mortgage rates,” said William Porterfield, a Redfin agent in Little Rock, where sales increased 33 percent from a year ago. “They’re focused on buying as much house as possible while interest rates are so low.”
The shift in the mix of housing activity away from expensive coastal markets and toward affordable ones in the middle of the country kept a lid on price growth. May’s median home sales price rose by just 4.3 percent, down from the 4.8 percent rate posted in April, even though sales grew and inventory shrunk.
As buyers were eager to scoop up existing inventory, sellers pulled back in May. The number of new homes listed fell for the second month in a row, down 2.2 percent from last year. The decline in new listings was especially acute in the Northeast. Boston, New York’s Hudson Valley and Wilmington, Delaware all saw 18 percent year-over-year declines.
Overall home inventory decreased for the eighth-consecutive month in May, falling 6.6 percent. This was the largest year-over-year decline in the number of homes for sale in nearly three years.
May was the fastest market on record since we began keeping track in 2009. The typical home spent 42 days on the market, a full week faster than the same time last year. Even the affordable markets could not avoid the intensity of the 2016 market. Sacramento, Salt Lake City, Grand Rapids and Omaha all saw their typical home sell within two weeks last month.
The average sale-to-list price ratio was also the highest recorded since at least 2009, clocking in at a record 95.3 percent, up from 94.6 percent a year earlier. With inventory continuing to fall and all indicators suggesting that mortgage rates won’t rise before autumn, the market’s intensity is unlikely to diminish as we head into summer.
Prices
Sales
Inventory
Competition
You can download data from the May Market Tracker in an Excel spreadsheet. The tables that follow feature Redfin’s largest metro regions. For all of our data coverage, visit the Data Center.
For additional local analysis, see: Chicago, Los Angeles, San Francisco, Miami and Washington, D.C.
Redfin chief economist Nela Richardson will host a Facebook Live Video Q&A on the latest housing market updates on Monday, June 20th at 11 AM PT/ 2 PM ET. Join in on our Facebook www.facebook.com/redfin.
