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Did the U.S. Housing Market Stay Hot in May?

Redfin reports that home-sale prices [1]rose 3.6% year-over-year to an average price of $315,700—the largest annual price increase in seven months.

Despite the large jump, Redfin said the increase fell short of last year’s 7.1% growth rate.

Just six of the 85 largest metro’s tracked by Redfin saw year-over-year declines in their median sale price. San Jose, California’s 6% drop was the biggest in the nation, and was followed by New York, New York (-2.5%), and Honolulu, Hawaii (-2.2%).

California was home to three other metros that saw decreases: Orange County (-1.4%), Los Angeles (-0.8%), and Oakland (-0.7%). Home-prices increases nationally peak around 15% in 2015.

"As mortgage rates have fallen this month, Redfin has seen upticks in the number of people wanting to talk with our agents about buying homes and the number going on home tours,” said Redfin Chief Economist Daryl Fairweather. “Recent surges in mortgage applications [2] also reflect the impact low rates are having on homebuyer demand nationwide. We haven’t yet seen a commensurate increase in U.S. home sales, and I don’t expect sales to increase substantially in the long run. That’s because there still aren’t enough homes for sale for all of the people who want to buy homes. In May, inventory posted its smallest increase in eight months, and fewer new listings came on the market than last year. Low rates and rising prices will likely lure sellers onto the market this summer, but the lack of new construction will continue to hold back sales growth.”

The report states that 314,300 homes were sold in May, which is a 14.1% increase from April, and a 0.2% increase year-over-year. Total listings in May declined 0.7% year-over-year in May to 418,900.

A total of 890,000 homes were listed for sale in May, representing a 5.1% increase from the month prior, and a 2.5% increase from May 2018. Homes are also selling faster, as the average home was on the market in May for just 36 days, which is four days fewer in April.

Redfin, though, noted the “market is cooler” when referencing the 25.9% of homes for sale that dropped their price—an increase from 23.4% last year, and the highest ratio of homes with price drops since last September.