Home prices in the US increased 11% due to shortage of supply
The scarcity of housing supply, the situation that homebuyers have to compete with each other to buy the right home has pushed home prices in the US in August up 11% compared to the same period last year. This is also the highest year-over-year growth in the past six years, according to a recent study by Redfin.
Specifically, the median home price in the US last month hit $328,400, up more than $32,000 from a year ago, even as the country’s workforce is facing record unemployment due to the impact of the pandemic. effects of the Covid-19 pandemic. According to data from real estate company Redfin, the supply of homes for sale in August 2020 was 22% less than in the same period last year. Shortage of housing supply leads to quite fierce competition among home buyers, the market advantage is in favor of sellers.
Home sales also accelerated in August, with more than 585,000 transactions successfully closed, up 10% year-on-year, according to Redfin data. Meanwhile, pending home sales (homes that already have a buyer but are not yet completed, pending transactions) have grown even stronger, jumping 30% from last August. The number of new home listings appearing in the month also increased slightly.
“Supply of homes for sale is tighter than ever, while home prices are rising at their fastest pace in years,” said Taylor Marr, chief economist at Redfin.
Amid the outbreak of the pandemic, homebuyers tend to leave the largest US cities, flocking to neighboring suburbs, pushing housing prices in these areas to skyrocket. For example, the median home price in Bridgeport, Connecticut, located in New York City’s traffic belt, surpassed the $500,000 mark in August, up 30% from last year. Meanwhile, the median home price in New York has inched up less than 3%, according to Redfin data. Another example is Lake County, Illinois, just north of Chicago. This place has seen home prices increase by more than 24% compared to August last year due to the “hunting” activity in the Chicago neighborhood.
Home prices have also risen sharply in recent weeks, according to another report by realtor.com. Specifically, the average house sale price in the week from September 5 to September 12 on this real estate website increased by 11.1% over the same period last year. Even as buyers desperately want to take advantage of historically low mortgage rates, home prices are still out of reach for many. Many people looking to buy a home are feeling suffocated because of epidemics and natural disasters, making them even more limited in their previously meager housing options.
Home buyers in the US can hardly expect home supply to improve significantly in the near term because cold weather and the holiday season also make sellers more hesitant to sell their homes. If demand is still strong, the supply-demand imbalance is likely to cause more disadvantages for homebuyers. Currently, finding a suitable home is difficult, let alone competing with others.
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