Home buyers had better act fast: Homes are flying off the market.
In April, existing (as opposed to newly built) homes across the nation were for sale for a median of only 29 days before they were snapped up by buyers, according to a recent National Association of Realtors® report. That’s the shortest period of time since NAR began tracking these sales in May 2011.
Homes sold the fastest in some of the country’s hottest—and most expensive—metros. Silicon Valley’s San Jose led the pack, at a median 23 days, followed by San Francisco, at 25 days; Denver, at 27 days; and Seattle, at 28 days.
“The lack of homes on the market is a big deal. It’s crimping sales,” says Senior Economist Joseph Kirchner of realtor.com®, adding that the inventory of homes for sale was particularly low after buyers raced to close the previous month. In particular, “the number of homes at the affordable and moderately priced level is so tight that buyers can’t find homes under $250,000.”
This shortage might also explain why sales dipped 2.3% from March, according to the seasonally adjusted numbers in the report. However, they were still up 1.6% over April 2016.
(Realtor.com® looked only at the seasonally adjusted numbers, which have been smoothed out over 12 months to account for seasonal fluctuations.)
What’s the impact on how much homes cost?
The lack of homes for sale is also turbocharging price tags. The median existing-home price hit $244,800 in April. That’s up nearly 3.5% from March and represents a 6% annual increase.
“Homes in the lower- and mid-market price range are hard to find in most markets,” NAR’s Chief Economist Lawrence Yun said in a statement. “When one is listed for sale, interest is immediate and multiple offers are nudging the eventual sales prices higher.”
However, the median price of an existing home was significantly less, about 25.6% to be exact, than the median cost of a newly built home, according to a joint report by the U.S. Census Bureau and U.S. Department of Housing and Urban Development. New homes went for a median $309,200 in April.
Overall, prices of existing and new homes rose 1.4% in the first quarter of the year compared with the previous quarter, according to a recent report from the Federal Housing Finance Agency’s House Price Index. They were up 6% year over year, rising in every state—except Delaware and North Dakota—and Washington, DC.
The index used only data on mortgages sold to or guaranteed by Fannie Mae and Freddie Mac.
As for specific cities, annual prices rose the most in the Grand Rapids, MI, metro area by about 13.7% in the first quarter, according to the report. Meanwhile, they dipped the most in the San Francisco metro, by about 2.5%.
Where are all the homes?
Although monthly sales of existing homes were down throughout the country, the one exception was in the Midwest, which is known for its affordable homes and lower cost of living, according to the NAR report. Sales rose 3.8% in the region despite median prices rising 7.8% annually, to hit $194,500 in April.
Sales fell the most in the South from March, at 5%. However, they were 3.6% higher than the previous year. Annual prices rose 7.9%, to reach $217,700.
Monthly purchases also dropped 3.3% in the West, but were up 3.5% annually. Prices were up 6.8% annually in the region, at a median $358,600.
And monthly and annual sales both tumbled by 2.7% in the Northeast. Annual prices rose 1.6%, to $267,700.
What this means for home buyers
But all in all, home buyers had better get their ducks in a row to move quickly if they’re looking to buy an existing home.
“Demand is easily outstripping supply in most of the country, and it’s stymieing many prospective buyers from finding a home to purchase,” NAR’s Yun said in a statement.
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