Home prices rose 6.8 percent in December 2017 as inventory declined 14.5 percent according to a report on December home prices and sales released by brokerage firm Redfin released on Thursday. For the full year of 2017, home sales increased 1.7 percent over 2016 while prices rose 7 percent with median sales price being $284,500, the report said.
In 2018 tight inventory is expected to be the biggest market driver. “Like last year, low inventory will be the biggest driver of the 2018 real estate market. We anticipate a continuation of the same trends we’ve been seeing for the past few years. Price growth will remain strong as many homeowners will remain deterred from selling due to the low mortgage rates they’ve locked in and the high price of their would-be move-up home,” said Nela Richardson, Chief Economist at Redfin.
The report indicated that home sales ended a year of fluctuating sales growth with a decrease of 2.8 percent in December. The number of homes for sale declined 14.5 percent compared to a year ago, marking 27 consecutive months of inventory decline. The typical home that sold in December found a buyer after 49 days on the market, compared to 54 days in 2016.
The number of newly listed homes for sale decreased 3 percent in December, the report said. Additionally, with just 2.6 months of supply in December, the market was far below the six months of supply that represent balance between buyers and sellers.
San Jose lead the cities that faced the most acute shortage of inventory with only 0.5 months of supply in December. Home prices in this city in December climbed 32 percent compared to last year as supply sunk to an all-time low.