U.S. Home Prices Jump in December, Enjoy Biggest Increase in 2 Years
January 29, 2016
Sales Rise Nearly 8 Percent as Inventory Hits a New Low
According to national real estate brokerage Redfin, U.S. home prices rose higher in December 2015 than they did in the 22 months prior, posting an 8.8 percent year-over-year increase. There were also fewer homes for sale in December than in any other month of 2015 (down 5.4 percent year over year), but despite this lack of supply, sales were up 7.7 percent.
U.S. home prices dodged the typical December slow-down and spiked last month due to a dearth of properties on the market. In December, there was a three-month supply of homes for sale, a steep slide from the 4.1 months reported in November and far from the six months that signals a balanced market. The lack of inventory supported a fast market, where the typical home sold in 41 days, a week faster than a year ago.
The 7.7 percent year-over-year increase in sales, compared to 2.8 percent the previous month, continued a recent pattern of sales rebounding in December from November. In 2014, December sales grew 9.7 percent after dropping 0.7 percent in November. This trend casts doubt on the theory that a new mortgage rule, known as TRID or Know Before You Owe, had a significant impact on November or December sales volume.
Nela Richardson, Chief Economist at Redfin tells World Property Journal, “This surge in prices and sales isn’t necessarily indicative of a broader pick-up in the market, but it is an unusual occurrence for December, when the market typically slows down. The lack of inventory made it an unexpectedly competitive month for buyers. But without more listings, the strong sales growth we saw last month simply won’t continue; buyers lose interest when there’s little to choose from.”
In total, there were nearly two million homes sold (1,969,814 to be exact) in 68 markets tracked by Redfin in 2015, leading to a strong 9.6 percent increase from 2014.
Local Market Insights in December 2015:
*The median sale price in Hudson Valley, NY, climbed 15.1% from November, posting the biggest gains of any market. Year over year, prices were up 6.3%.
*Sales rebounded across the country in December from November, with 64 of 68 markets posting double-digit, month-over-month increases. San Jose (71%), San Francisco (29.7%) and Nashville (20.2%) had the biggest increases compared to last year.
*Denver and Oakland tied for the fastest markets, with half of all new listings selling in 18 days or less, followed closely by Seattle, where the typical home sold in less than three weeks.
*New listings surged at year end in Miami (58.3%) and Fort Lauderdale (26.9%), where sellers see demand from vacation homebuyers. New for-sale listings were up 80.4% in Miami from a year ago; sellers put more properties on the market in December than in any other month of 2015. Inventory in Miami is up 11.3% year over year.
Courtesy: WPJ Staff