Home prices are on the rise this summer selling season, according to the latest report from Redfin. May marked a 6.8 percent rise in home prices, making the median sale price $288,000. Despite home shortage and the number of homes for sale decreasing 10.9 percent, over the last year home sales increased 7.5 percent. However, the dip in home sales means there is only 2.7 months left of supply, the lowest Redfin reported ever recording. To put this in perspective, six months is considered a market balanced between buyer and seller.
Homes sold in May averaged an under contract time frame of 37 days, which breaks the April record of 40 days. Over a quarter of homes sold above their list price and the median sale-to-list price ratio hit 95.4 percent in May, both of which were records for Redfin.
“There is still a lot of momentum in home prices in many metros, not only on the coasts but also in places like Buffalo, Grand Rapids and Omaha,” said Redfin Chief Economist Nela Richardson. “Strong local economic growth and burgeoning demand from older millennials are accelerating home-price growth in this very competitive, low-inventory pre-summer market. The Federal Reserve’s latest announcement to raise short-term rates will have very little effect on buyer demand or on the overall housing market. If anything, it may motivate buyers to make their purchases sooner rather than later.”
According to a survey commissioned by Redfin, when over 1,000 buyers were asked what a 5 percent rate hike would do to their home buying plans, A fourth said it would have no impact, but 23 percent said it would increase their urgency to buy before rates when up further. Twenty-nine percent said it would slow their search, 18 percent said though it would have no impact on urgency, they would look in other areas or buy a smaller home, and 5 percent said they would cancel their home search completely.