The scalding hot home sales market is ending the year on a high, according to a new report from Redfin.
For the four weeks ending December 20, the median home sale price increased 14% year over year to $320,714. In July, the median home price was $300,462.
In the same four-week time period, pending home sales jumped 34% YOY, while in the single week ending December 20, they were 30% higher than the week earlier. New listings of homes rose 12% from the previous year. Active listings (the number of homes listed for sale at any point during the period), however, fell 31% from 2019 to an all-time low, according to Redfin.
Thirty-nine percent of homeowners that went under contract accepted the offer within the first two weeks of the home being on the market, which was higher than the 26% of a year ago.
Another way to understand the market is the list-to-price ratio, which measures how close homes sell to their asking prices. That measure declined slightly to 99.4. At year-end 2019, that ratio was 97.9%.
The seasonally adjusted Redfin Homebuyer Demand Index, which measures the requests for home tours and other services from Redfin agents, rose 23% for the week ending December 20 from pre-pandemic levels in January and February.
During the week of December 18, mortgage purchase applications fell 5% week over week (seasonally adjusted) but were up 26% from a year earlier (unadjusted) during the week. These applicants were taking advantage of low 30-year mortgage rates, which fell to an all-time low of 2.66%. Since late July, rates have been below 3%.
“Going into the new year, it will truly be out with the old, because there will be very few homes from 2020 left on the market,” said Redfin chief economist Daryl Fairweather said in a prepared statement. “So those who resolve to buy a home in 2021 may need to wait with bated breath for sellers to list their homes.”
With supply drying up and home prices rising, homeownership may be pushed out of reach for more Americans in the year ahead.
“The housing market is still hot, but we may be starting to see rising home prices hurting affordability,” said Lawrence Yun, NAR’s chief economist.
That could keep more people in apartments and single-family rentals. In September, US single-family rent rose 2.5% year over year, according to CoreLogic Insights.
“The combination of scarce housing, low-interest rates, plus very strong demand “has pushed home prices to levels that are making it difficult to save for a payment, particularly among first-time buyers, who don’t have the luxury of using housing equity from a sale to use as a down payment,” said Yun.