The U.S. housing market accelerated to its fastest pace on record in May, as the typical home went under contract a full week faster than a year earlier, according to Redfin. At 42 days, median time on market hit its lowest point since Redfin began tracking this metric in 2009.
“After almost a decade of undersupplied housing stock, competition is fierce,” said Redfin chief economist Nela Richardson Thursday. “We’re seeing the intensity of fast sales and bidding wars even in affordable markets like Grand Rapids and Omaha, where the typical home sold within two weeks last month.”
Redfin’s news comes a week after the company released its 20 hottest markets report, which showed that homes in Colorado, California, and Washington were moving from market to closing in less than 10 days.
The news also comes alongside a 4.3 percent year-over-year growth in national housing prices, but also a 4.8 percent drop from April. “A shift in housing activity from expensive coastal markets toward affordable ones in the middle of the country helped keep a lid on price growth,” the report stated.
Meanwhile, sales surged 7 percent and inventory fell 6.6 percent in May compared to last year. Affordable markets in the Midwest and the South led the surge in sales. Detroit and Grand Rapids in particular led the charge, as each city saw the number of homes sold surge by more than 50 percent from last year. According to Redfin, nearly a third of markets reported growth in the double digits.
“After almost a decade of undersupplied housing stock, competition is fierce.”
Nela Richardson, Chief Economist, Redfin
The lure of the West, which featured almost exclusively in Redfin’s 20 hottest markets report from Wednesday, also drove growth.
“We’re seeing an influx of buyers from places like San Francisco, Southern California, Seattle and Washington, D.C. Most new residents are lured by tech jobs and opportunities to work remotely,” said Redfin agent Kent Selders. “Locals are watching prices rise, and many realize if they don’t buy soon, they’ll miss out while homes are still affordable. The result is incredible demand and rapid sales. Nothing like this has ever happened in Grand Rapids.”
Lastly, Redfin credits three-year lows in mortgages with enticing buyers.
“Move-up buyers have specifically noted they are buying now to take advantage of still-low mortgage rates,” said William Porterfield, a Redfin agent in Little Rock, Arkansas, where sales increased 33 percent from a year ago. “They’re focused on buying as much house as possible while interest rates are so low.”