Affordable housing markets see prices rising as the number of homes for sale continues to drop
Source: Housing Wire | Julia Falcon
In April, the supply of homes for sale was down 24% year over year, while new listings fell 42%, a new report from Redfin said.
Compared to a year ago, the biggest declines in active housing supply in April were in Allentown, Pennsylvania, -55.4%; Kansas City, Missouri, -48.8%; and Tulsa, Oklahoma, -48.5%.
“The supply of homes for sale declined even more dramatically than homebuyer demand in April,” said Redfin Lead Economist Taylor Marr. “While home sales fell the most in more expensive markets, in more affordable areas prices continued to increase. Even during the depths of the slowdown last month, the market was still faster and more competitive than it was a year earlier.”
The rate of growth in the U.S. median home sale price fell to 4.9% year over year, down from 6.9% in March. This makes the national median home sale price in April $303,895.
April home sales fell 23% nationwide from March on a seasonally adjusted basis, the report said. This is the largest decline Redfin says it has seen since January 2012.
It’s the most expensive markets that saw the biggest declines in home sales from a year ago – San Francisco, -53.9%; Detroit, -46.8%; and New York, -45.8%.
Redfin also said that more affordable housing markets will see sizable price gains. Only one of the 85 largest metro areas Redfin said it tracks saw a year over year decline in the median sale price – San Francisco, at -0.2%.
Nine of the top 10 metro areas where home prices rose the most year over year still had median prices below the national level – led in April by Detroit’s median price of $159,900, +27.9%; Memphis’ median price of $217,000, +22.0%; and Philadelphia’s median price of $250,000, +19.0%, Redfin said.
Redfin also said that homes sold in April spent six fewer days on the market compared to the prior year. In April, the typical home went under contract in 35 days, while it was 41 days in April 2019.
“The typical time between when a home went under contract and when the sale closes is still about four weeks nationally,” said Marr. “This means that many of the homes sold in April went under contract after the WHO declared that COVID-19 was a global pandemic, after initial claims for unemployment set new records, and after case numbers were already growing rapidly in the U.S.”
“So, although some might have expected this dramatic disruption in the market to impact home prices, we haven’t yet seen evidence that it has had much of an effect,” Marr continued.
Meanwhile, the share of homes that sold above list price increased 3.6 percentage points year over year, to 27.7% in April compared to 24.1% in 2019.