Redfin: U.S. Home Prices Up 7% in December; RE/MAX: ‘Record’ Finish to 2019

Redfin, Seattle, said U.S. home-sale prices increased by 6.9% year over year in December to a median of $312,500.

In a separate report, RE/MAX, Denver, said December posted a record finish to the year and decade, with a year-over-year increase in home sales of 13.5% in the 54 metro areas covered by the report, the highest increase of any month in 2019 and the highest for the month of December since 2009.

Redfin said home prices rose by 1.1% month over month on a seasonally-adjusted basis, the largest increase since February 2018.

“Low mortgage rates and a strong economy fueled homebuyer demand in December, which boosted both home sales and prices,” said Redfin chief economist Daryl Fairweather. “Prices heated up in West Coast metros like Seattle and Los Angeles, which indicates the slowdown of 2019 has officially ended in these markets.”

Redfin said prices continued to increase the fastest in affordable metro areas in December. Among the 20 metro areas with the largest year-over-year price increases, 16 were below the national median, led in December by Memphis (median price $190,000, up 15.9%), Camden, N.J. ($195,000, +14.7%) and Cincinnati ($187,000, +14.4%).

Fairweather said for more expensive metro areas, a boost in the loan limits for mortgages backed by FHA, VA, Fannie Mae and Freddie Mac that took effect in January could impact affordability and put upward pressure on home prices in the sweet spot of the limit increases. The new limit for most of the country is $510,400, up from $484,350 in 2019, while the limit in high-cost areas has increased to $765,600, up from $726,525 in 2019.

Of the 85 largest metro areas Redfin tracks, only two saw a year-over-year decline in the median sale price: In New York, home prices fell by  2.4%, possibly as a result of the increase in New York City’s “mansion tax” on homes priced above $1 million. In San Francisco, they fell 1.7%.

Redfin said the supply of homes for sale fell by nearly 15% year over year, the biggest decline since March 2013 and the sixth straight month of declines, with fewer homes for sale last month than any time since at least December 2012. Just one of the 85 largest metros tracked by Redfin posted a year-over-year increase in inventory: Knoxville, Tenn. (5.3%).

“Many homeowners have refinanced their mortgages to take advantage of low interest rates and therefore feel committed to staying put,” Fairweather said. “The lack of homes for sale is going to fuel competition and price growth in 2020.”

Redfin said homes sold in December spent two fewer days on market compared to the prior year. In December, the typical home went under contract in 50 days, compared to 52 days in December 2018. The share of homes sold above list price increased year over year, coming in at 19.1% in December compared to 17.3% a year earlier.

The report is available at https://www.redfin.com/blog/housing-market-news-december-2019.  

Meanwhile, the RE/MAX Monthly Housing Report said December posted a record finish to a year and a decade, with a year-over-year increase in home sales of 13.5% in the 54 metro areas covered by the report. That was the highest increase of any month in 2019, and the highest for the month of December since 2009.

Also posting a record for 2019 was the inventory decline of 14.5% year-over-year, accompanied by corresponding drops in months’ supply of inventory–3.3 vs. 4.8 a year earlier–and days on market–54 compared to 55 a year ago.

“It was good to see the year-over-year spike in December home sales, indicating robust homebuyer interest,” said Adam Contos, CEO of RE/MAX Holdings Inc. “The strong December capped a solid second half of 2019, with year-over-year sales increases in four of the final six months. The gains were largely attributable to low interest rates and high demand, and with those factors still in place, we expect sales to continue at a solid pace into the first part of this year.”

The report said year-over-year, sales rose in five months in 2019, with the majority occurring in the back half of the year. Inventory, meanwhile, grew year-over-year in each of the first six months, then shrunk in each of the past six months. The median sales price of $266,000 was 11.1% higher in December from a year ago and the highest year-over-year increase for any month of 2019.

Of the 54 metro areas RE/MAX surveyed in December, the overall average number of home sales rose by 4.1% from November and rose by 12.5% from a year ago. Leading year-over-year sales percentage increase were Birmingham, Ala., at +34.3%, Burlington, Vt., at +26.7% and Los Angeles at +26.2%.