The typicalhome that sold in Maywent under contract in 34 days, according to Redfin. May broke April's record of 36 days, which was the fastest month recorded going back to 2010. Amid the speed, the national median home sale price rose to$305,600, a 6.3 percent increase fromMay 2017across the 174 markets that Redfin tracks.
The number of newly listed homes for sale increased 4.3 percent compared to May of last year, driving a 3.6 percent increase in the number of homes sold. However, the overall supply of homes declined 5.4 percent during the same time period. Just 2.5 months of supply remained at the end of the month, compared to the six months that generally signals a balanced market.
Among homes that sold in May, 27.6 percent sold above their list price, the highest percentage, indicating strong competition for the few homes available. At the same time, nearly a quarter of homes for sale had a price drop in May, the highest percentage of price drops since September of 2017.
"Prices are still increasing, but not at the same rate we saw earlier in the spring," said Redfin senior economistTaylor Marr. "The record percentage of homes sold above list price is at odds with the higher percentage of price drops in May. This tells us that while it's still very much a seller's market, price growth and rising mortgage rates may be pushing buyers to the limit of what they're able to pay."
For the seventh month in a row,San Josetopped the nation with price growth over 25 percent. The supply ofSan Jose homes fell 13.8 percent compared to last year. That drop is actually the smallest decline in a 16-month stretch of inventory declines, an indication of the intensity ofSan Jose'sinventory shortage. A bit of good news forSan Josebuyers: the number of homes newly listed in May ticked up 11.2 percent compared to last year.
After a prolonged period of inventory declines, some metro areas are finally seeing more homes hit the market.Washington, D.C.andPortland, ORhave now had four months in a row of year-over-year increases in inventory.Seattleinventory increased for the second month in a row, up 17.4 percent in May compared to last year.
"Two months of growing inventory is a positive sign forSeattlebuyers, but the previous 43 consecutive months of inventory declines won't be reversed overnight," saidJessie Culbert, a Redfin agent inSeattle. "Even so, we can already feel a slight easing in the market. Homes are still selling quickly and often over-asking, but where last May a seller may have gotten 15 to 20 offers, this May it was two to five."
Other May Highlights
Denverwas the fastest market, with the typical home going under contract in just six days.SeattleandTacoma, WAwere the next fastest markets at seven median days on market, followed byBostonandGrand Rapids, MIat eight median days on market.
The most competitive market in May wasSan Josewhere 83.8% of homes sold above list price, followed by 79.6% inSan Francisco, 76.2% inOakland, 63.1% inTacoma, WA, and 61.9% inSeattle.
San Josehad the nation's highest price growth, rising 27.6% since last year to$1,250,000.Tacoma, WAhad the second highest price growth at 19.6% year-over-year, followed byMemphis, TN(16.9%),Las Vegas, (15.9%), andRochester, NY(15.4%).
No metros saw price declines in May.
Thirteen out of 73 metros saw sales surge by double digits from last year.Warren, MIled the nation in year-over-year sales growth, up 38.5%, followed byBaltimore, up 31.8%.Camden, NJrounded out the top three with sales up 24.7% from a year ago.
Buffalo, NYsaw the largest decline in sales since last year, falling 17.2%. Home sales inRochester, NYandBaton Rouge, LAdeclined by 16.6% and 12.8%, respectively.
Indianapolishad the largest decrease in overall inventory, falling 37.7% since May of last year.Rochester, NY(-37.1%),Buffalo, NY(-32.8%), andMilwaukee(-22.9%) also saw far fewer homes available on the market than a year ago.
Portland, ORhad the highest increase in the number of homes for sale, up 35.3% year over year, followed byDetroit(28.4%) andAllentown, PA(24.4%).
To see trends in sellers' pricing strategies, Redfin compares the list price to theRedfin Estimate, Redfin's automated home-value estimate. When sellers consistently price their homes below the Redfin Estimate in a market, this can indicate a common strategy to deliberately underprice to create a bidding war.
The median list price-to-Redfin Estimate ratio was 93.2% inSan Francisco, the lowest of any market. This indicates the typical home for sale in May was listed at 94.1% of its estimated value. Only 5.9% of homes inSan Francisco, CAwere listed for more than their Redfin Estimate.
Conversely, the median list price-to-Redfin Estimate ratio was 102.4% inMiamiand 102.1% inWest Palm Beach, FL, which means sellers are listing their homes for more than the estimated value in those metro areas. InMiami, 84.7% of homes were listed above their Redfin Estimate, the highest percentage of any metro.
For Bay Area renters struggling to afford apartments that keep getting more expensive, the latest numbers could seem too good to be true — the region’s runaway rent prices finally may be starting to level off.
San Jose is looking at the slowest start to the summer rental season in years. Rents in San Francisco are flat-lining. And Oakland saw a minuscule increase in rent prices last month.
That’s according to a new study by apartment search website RentCafe, which found the Bay Area is part of a nation-wide trend — while rents continue to increase, they’re doing it at a significantly slower pace. Experts say the slowdown suggests that in the near future, renters may finally find relief from the sky-high prices that are forcing people to flee to the Central Valley and beyond in search of cheaper housing.
“Renters are looking at an optimistic start of the rental season,” the RentCafe researchers wrote in thereportreleased Thursday.
The average rent in San Jose last month was $2,692, or 2.1 percent more than at the same time last year, according to the report. That’s the slowest annual growth rate the city has seen since 2011 — a major milestone for a region where prices seemed to be climbing ceaselessly. The average rent in Oakland was $2,617, a 2.5 percent increase from the year before, which marks the second slowest growth rate the city has seen since 2012. The average rent in San Francisco was $3,453, a 0.6 percent increase, and the second-slowest growth rate the city has seen since 2011. San Francisco saw a cooling off last year, when rents actually dropped 3.3 percent from May 2016.
John Protopappas, president and CEO of Oakland-based real estate development company Madison Park Financial Corporation, predicts this is the start of a major slowdown in the Bay Area’s rental market. It’s all about supply and demand, he said. In Oakland alone 7,000 housing units are under construction, and as those finished units flood the market, Protopappas expects the city’s rents to drop 20 or 30 percent in the next two or three years.
“It’s going to become a renter’s market instead of a landlord’s market,” he said.
But the broader Bay Area continues to add more jobs than houses, and until that changes, prices won’t drop enough to have a significant impact on residents, said Mathew Reed, policy manager of SV@Home, an organization dedicated to supporting the creation of affordable housing in Silicon Valley.
Nevertheless, the recent numbers are good news, Reed said. A 2 percent annual increase in rent prices is healthy, as it mirrors the rate of inflation, he said.
Meanwhile, flat-lining rents could impact real estate developers with plans for new buildings. As construction costs continue to rise — some say a whopping 50 percent in the past five years, due largely to a shortage of workers driving up wages for skilled labor — new buildings won’t be erected if rents don’t keep pace with rising costs.
“It will slow down development until we get back to an equilibrium,” Protopappas said. “But it will take years … in the meantime it’s going to be a renter’s market for a long time.”