Surges in List Prices and Price Drops Indicate Sellers May Be Overly Confident
SEATTLE — Oct. 22, 2015 — The latest data from September demonstrate how impressively the housing market has performed in 2015, according to Redfin (www.redfin.com), the next-generation real estate brokerage. Sales in 2015 have outpaced 2014 sales every month this year and prices have increased year over year each month since December 2011.
The median sale price increased 5.8 percent and home sales were up 9 percent year over year in September. Despite a 5.2 percent bump in new listings, there were 5.5 percent fewer homes for sale than last September.
Based on the current pace of home sales and inventory, the overall supply of homes increased to 3.4 months in September, up from 3.1 in August but well below the six months of supply that is generally considered a well-balanced market.
Despite robust year-over-year growth, the data indicate a typical seasonal slowdown. Prices fell 2.5 percent and sales were down 8.5 percent from August. The total number of homes for sale was relatively flat from August, up 0.6 percent, and 2.8 percent fewer new listings were added in September than in August.
While the market still favors sellers, the data indicate that sellers may not be realistic about the dynamics of selling in the fall. The only indicator that did not drop from August was the median list price, which increased by 4 percent, the highest month-over-month percentage for any September in the last five years.
Michael Alderfer, a Redfin agent in Washington, D.C., explains, “If a seller sees a neighbor’s home go for well over list in July, they are tempted to price their home at the same level two months later. But fall market conditions are considerably slower, so it’s critical for sellers to focus their pricing strategy in accordance with the sale prices of homes that have sold in recent weeks, not months.”
Pricing a home too high carries big risks, but especially this year. In September, 25 percent of sellers had dropped their price. Last year at this time only 20 percent of homes on the market had a price drop.
We expect that sellers will have to lower their prices more in coming months as the rest of the market continues to slow for the year.
Local Market Insights in September
For all but 10 metros sales prices were flat or declined from August to September. Charleston, SC saw the largest monthly jump in the median sale price to $240,000, 6.7% higher than in August, followed by New Orleans (5.1%) and Detroit (3.4%).
Nashville saw the highest sales growth for the second month in a row, up 25.4% year over year. Ventura County, CA came in a close second with 25.0% more homes sold than last last year.
Sales continued to decline in San Francisco, where only 1,087 homes sold, down 10.2% from August and 17% from September 2014.
Denver was the fastest market in August with half of all homes selling in 10 days or less, a significant slowdown from 7 days in August.
Redfin also took an in-depth look at home prices, inventory and sales across neighborhoods for four cities: Chicago, Los Angeles, San Francisco and Washington, D.C.