Real estate agents can gear up for a competitive summer season. According to Redfin, the average house sold in May went under contract in 37 days, that’s the fastest reading since the real estate brokerage began tracking the market seven years ago. In fact, homes are selling at record paces in several regions.
It topped the previous record of 40 days, set in April, according to a CNBC report.
Where are homes selling the fastest? Redfin noted that Denver leads the nation in fastest sales, with nearly half of its new listings going under contract in just six days. Seattle came in second at seven days. The top five also included Grand Rapids, Mich.; Portland, Oregon; and Omaha, Neb. Rochester, N.Y., had the largest decrease in the supply of homes for sale, down nearly 36 percent compared with a year ago. Buffalo, New York, (-32 percent), San Jose, California, (-31 percent), and Seattle (-27 percent) rounded out the top five.
Tight supply and high demand are driving sales, with listings down 11 percent over the same time last year, according to Redfin. This means there is just 2.7 months of supply and the National Association of Realtors considers a six-month supply to be a balanced market between buyers and sellers. As a result, in key markets, supply issues are driving home prices higher. The median price of a home sold in May jumped 6.8 percent compared with a year ago. According to Redfin’s chief economist, Nela Richardson, that figure is about triple the average income gains and may already be hurting sales, as affordability weakens.
“There is still a lot of momentum in home prices in many metros, not only on the coasts but also in places like Buffalo, Grand Rapids and Omaha. Strong local economic growth and burgeoning demand from older millennials are accelerating home-price growth in this very competitive, low-inventory, pre-summer market.”
There is little concern over the Federal Reserve’s latest hike in the short-term interest rates. Richardson said mortgage rates are expected to move higher at some point, as the central bank continues to shrink its balance sheet of mortgage-backed securities.
“If anything, it may motivate buyers to make their purchases sooner rather than later.”
There also is another bit of good news for agents. The current interest rate on the popular 30-year fixed conforming loan is hovering just above 4 percent. Even if rates were to hit 5 percent, another Redfin survey found that most homebuyers wouldn’t change their plans.