September Brings an Unseasonal Inventory Increase of 4%
There was a rare late-season boost in the number of homes for sale in September: Inventory increased by 4 percent over August and newly listed homes were up 2.1 percent. According to Redfin agents, this bump is because would-be sellers took longer to find homes to buy, which delayed them putting their homes on the market.
Will new inventory bring buyers to the market this fall and winter? They’ll be interested but cautious, according to Redfin agent Tom Lewis in Washington, D.C.
“New inventory gets people’s attention and gets them excited, but buyers are wary and know that new listings could be gone quickly if there is a lot of interest,” he said. “Many of them are hesitant to step into a multiple-offer situation because they have lost offers on other homes. But if a home sticks around for a few days, then they’ll be more willing to bite.”
Declining mortgage rates could create even more demand among buyers, who want to get in before an expected rise in rates next year. So even though inventory is rising, it may not be enough to spur a long-term turnaround in housing supply to meet demand.
As we predicted last month and as is typical in September, the median sale price continued to tick downward, this time 3.6 percent month over month. The median sale price of $268,700 is almost the same as in August of last year when it was $268,900. Year over year, prices will likely increase over the last few months of 2014, but we don’t expect that growth to be higher than the 3.9 percent that prices were up in September over last year.
Even as the median sale price slid back to August 2013 levels, regional variation in price growth continued. In East Coast markets including Boston, Baltimore, Chicago, Washington, DC, and Philadelphia, median sale prices were lower this September than they were in August 2013. Most West Coast markets, on the other hand, continue to outpace last year’s price levels. In fact, prices in San Jose and San Francisco grew faster in September than in any other month this year, at 9.6 percent and 8.6 percent, respectively.
Bolstering our view that price growth is likely to slow a bit more this year is a 30-month low in the number of homes that sold above their list price: 16.5 percent. Homes are also staying on the market four days longer than they were last month, and the number of homes that sold in two weeks or less was down to 29.8 percent in September compared with 32.9 percent a year earlier.
In line with seasonal trends, sales volume declined by 13.7 percent in September from August. We’ve seen a similar slump for the past three years in September when home sales declined by 18.3 percent, 18.5 percent and 11.9 percent in 2013, 2012 and 2011, respectively. Home sales were down by 1.7 percent from last September.
Although sales are lagging 2013 volumes, there are a number of spots around the country bucking that trend, thanks to affordable prices and strong job growth. Metros that had the strongest growth in sales volume in September compared to last year were Orlando (16.1 percent), Tacoma (12.4 percent) and Tampa (11.9 percent). These three cities all have below-average median sale prices, like most of the other metros that saw a growth in sales.
Two places with strong growth in sales volumes that don’t have below-average median sale prices are Denver and Hudson Valley, New York. In both of these areas, unemployment is well below the national average, with a strong local economy making up for higher prices.
