Dive Brief:
-
U.S. home prices increased 7% in October compared with the same period last year to a median sales price of $269,200, the best annual growth since December 2015, according to real estate brokerage Redfin.
-
Leading the rise in prices across the country were six Florida metro areas: Deltona (18.4%), West Palm Beach (14.8%), Fort Lauderdale and Tampa (14.2%), Fort Myers (14.1%) and Lakeland (13.6%).
-
Home sales were down 3.2% from a year ago and 13.1% from September. Inventory tightened for the 13th-straight month, down 8.6% year-over-year in October, representing its largest drop since May 2013.
Dive Insight:
While home prices had their strongest month since December 2015, home sales fell off a recent comeback spate and inventory conditions continued to tighten. A lack of new properties on the market continues to make it difficult for would-be homeowners, particularly younger, price-sensitive buyers, to find an affordable property. There were 6.9% fewer new homes listed in October than there were for the year-ago period, according to Redfin.
The current climate of low mortgage rates, however, could “give buyers a bit of wiggle room against budget constraints,” Redfin Chief Economist Nela Richardson said in a release.
In a report last month, Redfin found that 5% of potential home sellers said they expect home prices to drop next year compared with 68% who said they expected them to continue rising. Property information and analytics provider CoreLogic forecast earlier this month that home prices are set to rise 5.2% from September 2016 to September 2017.
The continued increases come amid a lingering shortage of inventory, helping to underpin pent-up demand and keep prices elevated. With the situation unlikely to subside in the near-term, many first-time buyers are being deterred from entering the new home market and are continuing to rent or live with family.
For more housing news, sign up for our daily residential construction newsletter.