Home Price Appreciation Shows Continued Deceleration
Reports from ATTOM Data Solutions, Irvine, Calif., and Redfin, Seattle, note continued slowdowns in home price appreciation over the past quarter.
The ATTOM quarterly U.S. Home Sales Report showed single-family homes and condos sold for a median price of $255,000 in the second quarter, up 6.3 percent from a year ago to a record high–but the slowest annual appreciation since Q2 2016.
Daren Blomquist, senior vice president at ATTOM Data Solutions, said the deceleration continues a more than year-long trend. “Annual home price appreciation nationwide has now slowed for five consecutive quarters following a post-election spike to double-digit appreciation in the first quarter of 2017,” he said. “Although home sellers are still in the driver’s seat of this housing market, moderating home price appreciation is good news for prospective homebuyers and signals that rising mortgage rates and other housing headwinds are cooling red-hot home price appreciation in some areas.”
Key findings:
–Annual home price appreciation in the second quarter decelerated from the previous quarter in 80 of the 122 metros (66 percent) analyzed for median home prices, including Los Angeles, Chicago, Dallas-Fort Worth, Houston and Philadelphia.
–The median price per square foot for homes that sold for $1 million or more in the second quarter increased 5.4 percent from a year ago, accelerating from 3.2 percent annual appreciation in the previous quarter and from 3.4 percent annual appreciation a year ago. The median price per square foot for homes that sold for under $1 million in the first quarter increased 6.5 percent from a year ago, but that was down from 8.2 percent annual appreciation in the previous quarter and down from 9.0 percent annual appreciation a year ago.
–Among 122 metropolitan statistical areas analyzed, those with the biggest year-over-year increase in median prices were San Jose, Calif. (up 25.0 percent); Flint, Mich. (up 23.7 percent); Seattle (up 14.3 percent); Boise, Idaho (up 14.3 percent); and San Francisco (up 14.2 percent).
–The U.S. median home price of $255,000 in the second quarter was 6 percent above the pre-recession peak of $241,648 in Q3 2005. Median home prices in 79 of the 122 metro areas analyzed for median home prices in the report (65 percent) were above their pre-recession peaks in the second quarter.
–Average homeownership tenure increased to a record-high 8.09 years in the second quarter, up from 7.91 years in the first quarter and up from 7.83 years a year ago.
–Homeowners who sold in the second quarter sold for an average of $58,000 more than their original purchase price, the highest average home seller price gain since Q3 2007, representing a 30.2 percent return on original purchase price, up from 28.9 percent return in the first quarter but down from a recent peak of 30.8 percent in Q4 2017.
–Distressed sales accounted for 11.9 percent of all single family home and condo sales in the second quarter, down from 14.9 percent in the previous quarter and down from 13.5 percent a year ago to the lowest level since Q2 2007, an 11-year low.
Meanwhile, Redfin reported home-sale prices increased 5.7 percent year over year in June to a median of $312,700, the slowest price growth since December 2016. At the same time, the number of homes for sale in June fell by just 6 percent year over year, which continues the gradual easing of year-over-year inventory declines since January of this year.
The report said homes sales fell 3.3 percent in June compared from a year ago; however, Redfin noted June had five Thursdays, a common day for home purchases to close, compared to this June, which had just four. “If June 2017 did not have the fifth Thursday, year-over-year homes sales would be up by 1.2 percent, Redfin said.
Redfin noted homes also sold at their fastest pace on record, a median 34 days in June, unchanged from May and three days faster than last year.
Notably, the report said inventory increased, “providing welcome relief for some buyers,” said Redfin CEO Glenn Kelman. The number of homes for sale in June increased by double digits in Portland (31.6%), San Jose, Calif. (11.9%) and Seattle (24.2%). These markets also experienced sales declines of 9.6 percent, 16.3 percent and 10.1 percent, respectively.
“The affordability crisis may have reached a breaking point in Portland, San Jose and Seattle,” Kelman said. “After 75 straight months of price increases in these markets that far outpaced wage growth, homebuyers are now becoming selective about which homes to buy, and at what price. The homes that did sell in June still sold quickly, but buyers were significantly more likely to reject homes that were less desirable or aggressively priced by the seller.”
The report noted the percentage of listings in these markets that sold within two weeks declined in June from 61 percent to 52 percent, and the fraction of listings that dropped their price increased from 31 percent to 33 percent.”
“We’ve seen similar signs of buyer fatigue in the past, especially at this point in the season,” Kelman said. “But in this case the lull has lasted a bit longer and affected more markets than in the recent past. It’ll be interesting to see whether buyers adjust to the latest price increase and come back in force this fall, or if instead we see these markets shift more in favor of buyers.”
