Home prices make largest jump of 2019, but Silicon Valley down: Redfin
Housing prices rose commensurate with the temperature, but ongoing inventory issues will keep sales in check, according to Redfin.
May's home-sale prices increased 3.6% year-over-year, representing the biggest annual increase in seven months. It's also a month-over-month rise of 3%. The median sales price now sits at $315,000.
Of the 85 largest housing markets in the country, six had year-over-year price drops, with the largest decrease coming in the heart of Silicon Valley.
Sales prices in San Jose, Calif., fell 6% compared with May 2018, followed by decreases of 2.5% for New York and 2.2% for Honolulu. The remaining three metro areas with negative growth also were in California — Orange County dipped 1.4%, while Los Angeles and Oakland edged down 0.8% and 0.7%, respectively.
"As mortgage rates have fallen this month, Redfin has seen upticks in the number of people wanting to talk with our agents about buying homes and the number going on home tours," Daryl Fairweather, Redfin's chief economist, said in a press release. "Recent surges in mortgage applications also reflect the impact low rates are having on homebuyer demand nationwide."
Inventory concerns — especially at the low end of the market — continue to plague the industry.
"We haven't yet seen a commensurate increase in U.S. home sales, and I don't expect sales to increase substantially in the long run. That's because there still aren't enough homes for sale for all of the people who want to buy homes," Fairweather continued. "In May, inventory posted its smallest increase in eight months, and fewer new listings came on the market than last year. Low rates and rising prices will likely lure sellers onto the market this summer, but the lack of new construction will continue to hold back sales growth."
Approximately 314,300 homes sold in May, a slight rise of 0.2% year-over-year and a 14.1% month-over-month ramp up for prime buying season. The available homes on the market also predictably grew to 890,300, an annual increase of 2.5% and a monthly gain of 5.1%.
Just over half the metro areas saw increased for-sale inventory compared to a year ago. San Jose set the pace here as well, with a 60.2% increase, while Seattle, at 45.8%, and Oxnard, Calif., at 37.6%, followed.