Home prices rose 6.8 percent year-over-year in the month of December, pushing the median home sale price up to $287,000. Home sales for the month were down 2.8 percent, and the level of available-for-sale inventory plummeted 14.5 percent year-over-year, making December the 27th month of consecutive declines.
Furthermore, the number of homes newly listed for sale in December decreased 3.0 percent, representing only 2.6 months of supply (rather than the typical six month’s worth). When looking at the year as a whole, home sales increased 1.7 percent over 2016 and prices rose 7.0 percent to a median sales price of $284,500.
Like last year, low inventory will be the biggest driver of the 2018 real estate market. Major housing market dynamics don’t shift dramatically when the clock strikes midnight on Jan. 1st. We anticipate a continuation of the same trends we’ve been seeing for the past few years. Price growth will remain strong as many homeowners will remain deterred from selling due to the low mortgage rates they’ve locked in and the high price of their would-be move-up home.
San Jose, California, and Seattle had record-low levels of supply matched with record-high home price growth. San Jose and Seattle had 0.5 and 0.6 months of supply, respectively, meaning “that if the pace of home sales continued and no new homes were listed, it would only take about two weeks for all the homes currently for sale to find buyers,” said the report.
But, the lack of supply didn’t halt buyer demand as evidenced by San Jose’s spot as the fastest and most competitive market with homes selling within 12 days, and most at above listing price (76.2 percent).Despite these factors, San Jose is still more affordable than its neighbor to the north — San Francisco. Even highly-paid tech workers are priced out of San Francisco and moving to San Jose. This demand coupled with low inventory and job growth at the tech campuses in the South Bay has caused prices to soar.