Redfin Real-Time Home Price Tracker: Home Prices Hit Two-Year High in August, Up 5% From 2011

Here’s the latest Redfin Real-Time Price Tracker: a monthly report on home prices, sales and inventory across 19 U.S. markets, published weeks before any other index, based on the local databases used directly by real estate agents to list properties and record sales.

National home prices hit a two-year high in August, marking a 5% gain from August 2011 and holding steady month-over-month during a time of year that typically sees a seasonal decline in prices.

Following is a summary of key metrics across 19 major metropolitan markets:

• Home prices in August increased 4.9% year over year, and were flat month over month (+0.1%).
• The number of homes for sale declined 28.5% from August 2011 to August 2012, and by 4.5% since July.
• Home sales increased 1.4% over last year, but fell 2.5% since July, a typical decline for this time of year.
• The percentage of listings that sold within 14 days of their debut increased slightly in August, from 26.7% in July to 27.6% last month.

Home prices will no doubt decline a bit into the winter (as they do every year), but bearish market observers who predicted that price gains made earlier in 2012 would be entirely erased have been proven wrong so far in the second half of the year. All signs point to continued modest year-over-year price gains through the end of the year, more or less in line with inflation in most markets.

Although the latest data is good news for sellers, the bad news just keeps coming for buyers in search of selection. The number of homes on the market continues to drop to new lows, falling another 5 percent in August. Across the 19 metro areas surveyed by Redfin, there were over 81,000 fewer homes for sale in August 2012 than in August 2011.

Prices Holding Steady Into Slow Season, Up 5% Year Over Year

In 2010 and 2011 home prices peaked in May or June and headed steadily down through the second half of the year. This year home prices rose in most markets between June and July and again between July and August. Eleven of the 19 metro areas Redfin measures saw month-over-month increases, while prices were flat again nationally. Seventeen cities had higher prices than a year earlier.

Phoenix continues to rule the roost in home price gains, turning in a ridiculous 31% year-over-year gain in August. Second place was captured by San Jose, which saw prices rise 15% since a year ago. On the other end of the spectrum, Chicago took the biggest hit; down 4% from August 2011.

Inventory Down 28.5% Year Over Year

Five consecutive months of year-over-year price gains have not been enough to get sellers into the market, as evidenced by yet another massive year-over-year drop in the number of listings for sale. Year-over-year declines in inventory have been getting more severe every month for the last ten months, from “just” a 13.7% dip in October 2011 to a 28.5% drop in August 2012.

One in Four Listings Is Under Contract in Less than 14 Days

As of August 27.6% of new listings were under contract in two weeks or less. This number shot up as spring began and has held remarkably steady over the last six months, indicating that while the market is definitely much hotter than it was a year ago, the competition hasn’t appreciably increased since March.

Sales Volume Up 1.4% Over Last Year, Down 2.5% Since July

Home sales marked another increase over a year earlier, despite the increasing lack of homes on the market for buyers to choose from. The 1.4% year-over-year sales increase was somewhat muted by an unusually strong performance in August 2011, when sales spiked up 7.3% from July. This year sales dipped 2.5% between July and August, a much more normal seasonal movement.

“In our business, Redfin saw a huge surge in August closings, with September down and October likely to be up,” said Redfin CEO Glenn Kelman. “After Labor Day, we were surprised to see a relatively large number of new customers touring homes for the first time, which has given us reason to be optimistic about the winter and even the year ahead. The only reason there aren’t more buyers is that there aren’t more sellers, as most would-be sellers are holding out for more price gains in 2013 before listing their home, and many of today’s move-up buyers plan to rent out their old place.”

About the Real-Time Home Price Tracker

Redfin’s monthly report on home prices, inventory levels and sales volume is an up-to-date, accurate portrait of the U.S. real estate market, coming weeks or months ahead of other market reports. As a broker with access to dozens of Multiple Listing Services (MLSs) used by real estate agents to list properties and record sales, Redfin gets data within minutes of a sale, pending sale or listing activation, well before any government, media or analytics organization. Using MLS fields, Redfin is able to distinguish houses from condominiums and townhouses — which often sell for less money.

To validate the accuracy of the data and to account for sales not handled by a real estate agent, Redfin compares MLS data with county records as they become available, using sophisticated algorithms to identify and resolve disparities about square footage or price for each address. Full data may be downloaded in a spreadsheet, and the report methodology is available as an Adobe document.