18 July 2017
Comparing home sales for the first five months of the year, 2017 has had the best sales market in a decade. The reasons for the rise in sales include the lowest unemployment rate since 2001, low mortgage rates, the rosiest consumer confidence in 17 years, and growing numbers of millennials looking to buy.
Various indicators underscore the frenetic pace of sales. ‘Hot’ markets, those with robust demand relative to the limited number of homes for sale, have a short number of days-on-market before sale. We examined listing and sales data from Multiple Listing Services across 66 metros and found that 18 percent of homes sold in under 30 days this spring, the highest share in at least 17 years (Exhibit 1).
Further, an increasing number of homes on the market are receiving multiple contracts, often triggering a buyer bidding battle, creating conditions akin to an auction. Through spring of this year, 23 percent of homes sold had a final contract price above their original list price, the highest share since at least 2000 (Exhibit 2)
These patterns are not uniform across the U.S. but vary depending on the strength of local economies and the demand-and-supply balance across neighborhoods. The San Francisco Bay area has seen strong purchase desires bump up against very limited inventory, resulting in about three-fourths of homes selling above their list price. In Seattle, three-in-five homes have sold this spring above their list price, and has been a reason why the Seattle area tops all other metros in home-price growth over the past year, at 14 percent through May according to the CoreLogic Home Price Index. At the other end of the gamut, in southeast Florida, an area encompassing Miami and West Palm Beach, less than 10 percent of all homes sold above their list price, reflecting some of the remaining housing overhang in those markets (Exhibit 3).
Whether next spring tops 2017 in home sales will depend on the health of the overall economy, the level of mortgage rates, and the supply of homes listed for sale.
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