In May, U.S. median home prices continued a trend of double-digit appreciation, reaching a new an all-time high of $380,000 according to Realtor.com, up 15.2% year-over-year. But in a good sign for home shoppers contending with a competitive housing market, the rate of price growth moderated for the second time in 13 months.
Realtor.com’s Monthly Housing Trends Report found that sellers continued to come to the market in May, as new listings were up 5.4% year-over-year. However, with less than half the total number of homes for sale compared to last year, homes are selling 32 days faster than a year ago and 18 days faster than 2017-2019.
"Homebuyers looking to lock in still low mortgage rates face fierce competition for fewer homes for sale than last year's historic pandemic lows, pushing up the typical asking price in May to an all-time high for the fourth consecutive month," said Realtor.com Chief Economist Danielle Hale. "The good news is that price momentum may be beginning to cool off. While still in the double-digits, May was the first non-weather-related slowing in price appreciation since April 2020. And with a normal, summer seasonal peak in home prices expected this year, we could see growth fall back to a more normal single-digit pace in the fall."
Markets seeing the largest year-over-year growth in newly listed homes include mostly northeastern and midwestern metros, markets that were first and hardest-hit at the outset of the pandemic, including Buffalo (+64.3%), Philadelphia (+52.5%), and Washington, D.C. (+48.9%). Markets that are still seeing a decline in newly listed homes compared to last year include southern metros such as Nashville (-31.7%), Oklahoma City (-26.7%), and Raleigh (-23.5%).
Nationally, the total inventory of unsold homes (including pending listings) declined 20.8% from May 2020, while active listings were more than half of (-50.9%) last year's levels.
In short, the supply of homes available on the market continues to spiral downward, as more are fighting for a decreasing inventory. According to a recent report from Redfin, 51% of homes sold for more than their list price—up from 26% the same period a year earlier, marking a new record for the metric.
New listings grew 5.4% compared to last year, and although more sellers seem to be entering the market, there were 522,000 fewer homes actively for sale in May compared to a year ago, when the market had stalled due to the pandemic. Compared to the typical rate seen in May from 2017 to 2019, sellers added 23.3% fewer newly listed homes last month.
The number of homes for sale ended the month 50.9% lower than last year, according to Realtor.com. The decline in inventory can be traced to a number of factors. First, more and more are choosing to simply stay put and wait for inventory to rise. Another factor is the lack of new construction based upon a decline in the nation’s workforce of skilled laborers. Factor in a steady rise in the materials required to build a new home with the price of lumber nearly tripling over the past year, and you have the perfect storm forcing prospective homebuyers to sit on the sidelines.
With less than half the amount of homes for sale than this time last year, buyers looking to get into those homes are feeling the pressure to move quickly and close, with average time-on-market reaching a new low in May of 39 days. This marks a listing time that is 32 days faster than last year. Homes sold 19 days faster on average in May, compared to 2017-2019.
May home sales were found to be the fastest in Rochester, N.Y., which saw the average home selling for $245,000 spending just 11 days on market, while the average time spent on the market in Columbus, Ohio was just 13 days, and just 14 days in Denver.
Click here to read more about Realtor.com’s Monthly Housing Trends Report for May 2021.