Housing Market Reports: RE/MAX, Zillow, Redfin, Fitch

Here’s a summary of some housing market reports that came over the wire in the past few days, from RE/MAX, Zillow, Redfin and Fitch Ratings.

RE/MAX: August Home Sales Slip after Largest Inventory Decline in 13 Months
RE/MAX, Denver, said its August National Housing Report showed sales of existing home in its 53 analyzed markets fell by 1.6% from a year ago, despite buyer demand exceeding available housing supply. Following July’s year-over-year sales increase of 2.3%, the slight August decline marks the sixth month of 2019 that produced fewer sales than 2018.

The report said buyer demand outpaced homes listed for sale in August, causing the largest inventory decline in 13 months. An analysis of the report’s 53 metro areas shows August inventory shrank 5.5% year-over-year, the largest drop since 7.8% in July 2018. August’s inventory contraction followed July’s year-over-year inventory decline of 1.5% after nine consecutive months of year-over-year inventory growth. Months’ supply of inventory decreased to 2.8 compared to 2.9 in July and eclipsed the previous August low in the report’s 11-year history.

“The modest inventory growth that started last fall has been swallowed up by demand as buyers have returned to the market, likely spurred on by attractive interest rates,” said RE/MAX CEO Adam Contos. “Home sales dipping at the same time inventory falls suggests there may have been some reluctance on the part of sellers to list their homes. Nevertheless, demand is again ahead of supply, extending the favorable seller’s market that has been in place for several years.”

Zillow: Rents Accelerate, Home Values See Modest Growth
Zillow Inc., Seattle, said after flat-lining in the spring, quarterly home value growth has returned to a steady pace. The company’s monthly Real Estate Market Report said the median home in the U.S. is worth $229,600, up 4.9% from a year ago, still the lowest year-over-year change since April 2015. The rate of quarterly growth has risen in each of the past three months.

Quarterly growth reached an annualized rate of 3.4%, up from 0.4% in May, suggesting the market has shifted back to a sustainable pace of growth. Rent growth continued to accelerate, up 2% year-over-year to $1,595.

Zillow noted each of the 35 largest metros is appreciating at a slower annual rate than a year ago, but quarterly growth has accelerated since May in 26. Of these large markets, only San Jose (down 10.8% annually) and San Francisco (down 1.9%) saw year-over-year declines, while home values in Las Vegas, Chicago, Portland, Seattle, Sacramento, Boston, Baltimore, New York, Los Angeles, Washington, D.C., and San Diego fell quarter-over-quarter.

“We have persistently strong consumer confidence and the significant drop in mortgage rates to thank for the housing market’s return to modest home value growth,” said Zillow Director of Economic Research Skylar Olsen. “While it may be a good time to lock in your 30-year fixed rate, the market is still starved for inventory and it’s getting harder again for buyers to find the right home. If current market conditions hold, it wouldn’t be a surprise to see home values continue to rise, but we could see a shift if consumer sentiment dips.”

Zillow reported inventory fell by 3.9%, the biggest annual drop in 16 months, with 61,792 fewer homes on the market than this time last year. New listings grew on an annual basis for the second consecutive month, up 2.1% year-over-year.

Redfin: August Home Sales Post Biggest Increase in More Than 2 Years
Meanwhile, Redfin, Seattle, reported home sale prices increased by 2.7 percent year over year in August to a median of $312,200 across the 217 metros it tracks. Its monthly report said home prices have been growing in a tight range between 1 and 3 percent year over year since September 2018.

“Although home-price gains remained relatively modest in August, supply and demand are now heading back toward sellers’ favor,” said Redfin chief economist Daryl Fairweather. “Home sales are accelerating as buyers eat into a diminishing number of homes for sale. While these trends are to be expected given that mortgage rates have been declining since late last year, global economic uncertainty and talk of a looming recession in the U.S. are staving off many aspects of hot seller’s market–think bidding wars, fast sales and huge price escalations–at least for now.”

Redfin said metros that saw the biggest price gains were all smaller, affordable places, led by Knoxville, Tenn. (15.3%), Camden, N.J. (12.7%) and Greenville, S.C. (11.8%). Just six of the 85 largest metro areas Redfin tracks saw a year-over-year decline in their median sale price, the biggest of which was in San Jose, Calif., where home prices fell 11.6 percent from a year earlier.

Redfin also reported inventory declines, noting a 5.7 percent year drop over year, the biggest decline since April 2018. New listings fell 3.7 percent year over year in August, the largest decline on record since Redfin began recording this data in 2012. Despite this, the report noted 28 percent of homes listed for sale had a price drop in August, up from 27.4 percent a year ago.

Fitch Ratings: New York Home Prices Fall as Rate of Unpurchased Homes Grows
Fitch Ratings, New York, said U.S. home price growth stalled again this past quarter with notable movement this time coming from the East Coast, particularly New York.

The report said New York, though still a sustainable market, saw home price growth fall 1% in the second quarter, reflecting affordability pressure and a new federal tax law that has limited deductions in high-tax states such New York. “An additional ‘mansion tax’ on high-end properties that took effect July 1 will add negative pressure to already weakening demand for homes in New York City,” said Managing Director Grant Bailey.

Nationally, Fitch reported home price appreciation also showed a widening divide with higher priced homes increasing by just 2.2% in the second quarter, compared to 5.2% for lower priced homes. Not surprisingly, the backlog of unpurchased homes was also substantially larger for more expensive homes (6.8 months’ supply versus 2.2 month’s supply for lower priced homes).

The report said Idaho and Nevada remain the most overvalued housing markets in the country with home prices 25% and 21% overvalued, respectively. “Idaho home prices have increased over 11% over the last year alone and there is growing evidence that it does not have the underlying fundamentals in place to support that rate of growth,” Bailey said. Texas home prices also grew at an accelerated rate in 2Q’19 with the market now 16% overvalued and home prices in San Antonio and Austin getting increasingly frothy (over 20% overvalued).