In December, home prices surged 6.9% year over year, according to Redfin. Shrinking supply caused much of the increase. In some cities, the price appreciation was much larger.
The new report showed:
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, NJ ($195,000, +14.7%) and Cincinnati ($187,000, +14.4%).
Redfin provides data for the nation’s top 85 markets:
[O]nly two saw a year-over-year decline in the median sale price: In New York, home prices were down 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%.
Home sales also rose sharply:
Nationwide, home sales increased 6.8% year over year in December, the fifth consecutive month of increases,
The largest increases were in Anaheim, California, which was up 37.7%; North Port, Florida, which was higher by 35.8%; and New Haven, Connecticut, up 23.0%.
The supply of homes for sale was down 14.9%, the largest drop since March 2013. This means prices are highly likely to rise in future months. The largest decline in homes for sale was in Salt Lake City, where they fell 54.7% year over year in December. In Tacoma, Washington, they dropped 44.3%, and in San Diego, California, they were off 40.3%.
All in all, if the trend continues, home prices could rise by sums last posted when the economy rose from the Great Recession. The worry soon will be if this will trigger a sell-off.
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