Home Prices Surged in February 2018
Those looking to sell their home this spring may be in the right market. According to a report released by Redfin, U.S. home prices rose 8.8% in February of 2018, marking the largest jump in nearly four years (March 2014). It was also the 72nd straight month of growth. The Redfin report says the median home price across 172 metro areas now sits at $285,700.
While rising prices can partially be attributed to a strong job market, they’re likely also being boosted by a declining number of homes for sale. In February there were 11.4% fewer homes on the market than there were a year prior. Moreover this was the 29th consecutive month where year over year supply comparisons showed a decline. Still home sales managed to eek out a 0.4% gain over last February.
But wait — there’s more potential good news for sellers. First, buyer demand remains strong and homes are selling faster when compared to last year. Last month the average number of days before a home went under contract was 53, which is a full week faster than February 2017. Additionally, of homes sold last month, over one-fifth fetched more than their asking price.
The only potential problem sellers might have is that mortgage rates are rising, reaching their highest point in almost three years. As Redfin’s chief economist Nela Richardson explains, this may be causing some buyers to reconsider their plans. “Combining even slightly higher rates with price growth this strong will make it even more challenging for first-time buyers to find affordable homes to buy this year,” she said. However she adds that the effects might not be as bad as you might expect, noting, “The good news for sellers is modest rate increases are unlikely to curtail buyer demand. Just 6% of respondents to a survey commissioned by Redfin said they would cancel their home buying plans if rates rose above 5%.”
Overall the U.S. housing market really seems to be heating up as we head into spring and then summer. With a scarcity of homes available and buyers still interested despite rising mortgage rates, it seems like a good time for sellers to start making their move. If you’re curious about what metro areas in particular were growing last month, you check out Redfin’s full report on their site.