Redfin: Rising Demand, Falling Supply Driving Home Prices Up

Real estate broker Redfin released the June results of its ""Real-Time Home Price Tracker"":http://blog.redfin.com/blog/2012/07/redfin_real-time_home_price_tracker_june_prices_increased_30_but_sales_slowing.html, showing home price increases in nearly all 19 major U.S. markets.

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The tracker showed an average year-over-year price gain of 3 percent across all major markets and a monthly gain of 2.6 percent. Sales volumes also rose year-over-year (a 7.4 percent increase) but fell 1.1 percent month-over-month. Overall inventory levels declined, falling 25.3 percent from June 2011 and 2.4 percent from May this year.

The price data, combined with an ""earlier Redfin report"":http://blog.redfin.com/blog/2012/06/redfins_real-time_home-buyer_tracker_buyers_become_more_confident.html that showed demand broadening, points to a strengthening market, said Redfin CEO Glenn Kelman. Kelman expects prices to continue to rise, but said he's interested to see what happens next.

""Prices in June rose year over year for the second straight month, but the true test lies ahead,"" said Kelman. ""For the first time in five years, we're seeing sellers enter the market to take advantage of rising demand, not just out of sheer necessity. We thus expect listing prices to increase, even as employment remains weak and Europe's debt crisis continues. In competitive markets like the San Francisco Bay Area, buyers will likely rise to the bait. Elsewhere the market may falter.""

Out of the 19 markets served by Redfin, 16 showed annual price increases, with Phoenix posting the greatest gains (28.7 percent, the only double-digit year-over-year increase in all markets). Of the markets that posted decreases, Long Island suffered the most (a 4.4 percent drop). In month-over-month data, 16 markets showed price increases-Portland and California's Inland Empire stayed flat, and Austin fell 0.1 percent.

Additionally, the tracker showed that homeowners who listed their homes sold very quickly, with all single-family homes listed in the first three weeks of June finding a buyer within two weeks of debut. The San Jose market actually saw 52.5 percent of homes selling within that short time frame.

While sales occurred quickly, the number of closings grew only modestly since last year, owing partly to lack of inventory. Closings of single-family homes increased 4.3 percent since last year. The biggest drops in sales volume were found in places where inventory was in shortest supply: Sacramento, San Jose, the Inland Empire, and Denver.