U.S. home prices climbed 7.5% in March to a median price of $273,000 as home sales rose 8.9% year-over-year, according to Redfin. While home sales increased, the number of homes for sale fell by 13% from March 2016, the 18th-straight month of supply contraction.
Still, 2017 is on pace to be the fastest-selling year on record for the market. The average home in March went under contract in 49 days, compared to 60 days the year before. Almost 20% of homes sold in March went under contract within two weeks and nearly 22% of homes sold for more than their listing price.
- Denver and Seattle boasted the fastest markets, with the average home under contract in eight days. Grand Rapids, MI, Orlando, FL, and Santa Rosa, CA, reported the highest price growth, rising 15% or more since March 2016.
Continued growth in homebuying activity comes on the heels of positive reports in February that showed increases in the number of pending and new home sales in the U.S. While both point to recovery in the housing market, a slide in existing home sales for the month is largely a sign of persistent pressure from the ongoing inventory shortage.
The West Coast, especially, is feeling the heat from lagging inventory as strong job growth fuels a population influx that is keeping demand for housing high. Home to a handful of cities with relatively small shares of total housing stock available for sale, according to a recent ranking by Realtor.com, the region is expected to see continued price pressure, though that could taper somewhat as potential residents, and businesses, seek markets with a lower cost of living.
Redfin's findings follow similar reports that have recorded month-to-month and year-over-year price growth. The latest CoreLogic Home Price Index saw prices rise 1% from January to February and 7% from February 2016 to February 2017, with another 4.7% increase forecast for the year ahead.
Continued growth in home prices is one factor that could deflate buyer optimism. After posting a record high in February, Fannie Mae's monthly Home Purchase Sentiment Index fell 3.8 percentage points last month, with the number of respondents who say now is a good time to buy a home dropping by 10 percentage points.
Rising mortgage rates are also expected to be a roadblock to those looking to enter the market, along with a second, 25-basis-point increase by the Federal Reserve for the benchmark on such rates issued in a four-month span.
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