September Home Sales Slump, Prices Post Smallest Increase Since the Market Bottomed in 2012
U.S. home-sale prices increased just 2.1 percent in September compared to a year ago, to a median of $292,000 across the 171 metros Redfin tracks. This was the smallest increase in home prices we’ve seen since February 2012, when the median home price bottomed out at $168,000. It’s worth noting that last month’s low level of price growth was driven by the fact that the most expensive markets, including Seattle, Los Angeles and San Jose, California posted double-digit year-over-year declines in sales. As a result, inland metros with relatively affordable homes, like Pittsburgh and Grand Rapids, Michigan, contributed a greater share of sales to the nationwide total than they did last year, putting downward pressure on the national median sale price. In fact, 136 out of the 171 metros Redfin tracks experienced price growth greater than the national median of 2.1 percent, and half of the metros Redfin tracks experienced price growth at or above 6 percent.
For the first time in nearly three years, the number of homes for sale increased year over year, albeit slightly, up 0.2 percent from last year. National inventory growth was led by surges in softening Coastal markets like San Jose (82.7%), Seattle (54.5%), San Diego (30.7%), and Boston (9.1%).
The number of homes newly listed in September rose 3.6 percent year over year, but buyers seemed reluctant to make offers and purchase that new inventory, as September sales fell 4.8 percent year over year. Home sales declined in 50 of the 71 largest metro areas that Redfin tracks. In metros where high home prices have already pushed buyers to their financial limits, rising mortgage rates may be dampening demand. As of last week, the average interest rate for a 30-year fixed-rate mortgage had crept up near 5 percent for the first time since 2011. Last year at this time, rates were still below 4 percent. The biggest sales declines were again in West Coast metros, including Seattle (-27.7%), Los Angeles (-21.5%), and San Jose (-20.8%).
Across Redfin metros, the typical home that sold in September went under contract in a median of 40 days, two days faster than last year. Still, competition was noticeably less intense than last year. This September, 21.7 percent of homes sold above the list price, down from 23.8 percent last September. Likewise, the share of homes that went under contract within two weeks fell to 23.1 percent this September compared to 24.1 percent last September.
A Tale of Two Markets: The Coasts and the Heartland
Last year and earlier this year, Seattle, San Jose and Denver were the hottest markets with homes selling in days, not weeks. These metros have now been replaced by Grand Rapids, Omaha, Nebraska, and Indianapolis as the fastest markets in the country. In San Jose, the typical home that sold in September spent 26 median days on the market, 12 days longer than last year. In Seattle, the typical home is taking a full week longer to find a buyer, at 17 median days on market.
Meanwhile, metros in the heartland are kicking into high gear. Homes in Grand Rapids are going under contract in just 13 days, 15 days faster than they were last year. In Indianapolis, which is now tied with Boston as the third fastest market, homes are finding buyers in a median of 16 days, compared to 40 last year. This acceleration is due to increasing demand, as new residents move inland in search of affordability, without an increase in homes available for sale. The number of homes for sale in Indianapolis has been falling by more than 10 percent each year since Spring 2015, and fell 19.7 percent this September compared to last year. In Grand Rapids, homes for sale fell 2.3 percent, which is a moderate decline compared to the 5.6 percent decline in September last year, and the 21.2 percent decline in September 2016.
In the third quarter of 2018, 42 percent of the people searching for homes in Grand Rapids on Redfin.com were searching from outside of the metro area, with the largest share coming from Detroit, Chicago and Los Angeles. Indianapolis is also attracting homebuyers from more expensive cities, including Chicago, Los Angeles and the Bay Area.
As homebuyers find themselves priced out of places like Seattle and Los Angeles, they are increasingly looking to cities in the Midwest and South with more affordable homes and lower cost of living. Redfin will soon release its quarterly migration report, which tracks these migration patterns in more detail.
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Redfin Estimate
Below are market-by-market breakdowns for prices, inventory, new listings and sales for markets with populations of 750 thousand or more. For downloadable data on all of the markets Redfin tracks, visit the Redfin Data Center.
EDITOR’S NOTE: The Washington, D.C. and Baltimore metro areas were excluded from this report and analysis due to data accuracy issues. The issues stem from problems with the listings information that Redfin receives from the MLS. Redfin engineers are working with the MLS to resolve the issue, which does not impact the ability to view homes for sale in the Washington and Baltimore metro areas on Redfin.com.
