The sale prices of homes in the United States soared in August, according to Redfin’s latest report.
An average US home is now worth a median of $312,000 as home-sale prices rose 2.7% annually across 217 metros. Redfin said that the increase was the largest one in more than two years. Home prices have been climbing between 1% and 3% year over year since September 2018.
Smaller and more affordable metros posted the biggest price gains, including Knoxville, Tenn. (15.3%), Camden, N.J. (12.7%), and Greenville, S.C. (11.8%). Only six of the 85 metro areas examined by Redfin experienced an annual drop, the biggest of which was in San Jose, Calif., where home prices plummeted 11.6% from a year ago.
"Although home-price gains remained relatively modest in August, supply and demand are now heading back toward sellers' favor," said Redfin Chief Economist Daryl Fairweather.
Despite higher prices, more people bought homes, with sales jumping by 10.8%. The increase in home sales was the largest since March 2017, according to the report.
Camden, N.J., Baltimore, Md., and Minneapolis, Minn. drove the overall sales increase with year-over-year sales growth of 38.6%, 27.6%, and 26.7%, respectively.
However, housing inventory could not keep up with the demand. The supply of homes for sale went down 5.7% year over year, marking its biggest decline since April 2018. The drop was driven by a shortage of new listings, which also dipped 3.7% annually in August.
Relatively affordable metros saw the most significant declines in the number of homes for sale. These metros include Tacoma, Wash. (-26.8%), Salt Lake City (-26.1%), and Tulsa, Okla. (-24.4%). Metros with an increase in housing supply, on the other hand, were San Jose (12.5%), Oxnard, Calif. (11.5%), and Honolulu, Hawaii (11.4%).
"Home sales are accelerating as buyers eat into a diminishing number of homes for sale,” Fairweather said. “While these trends are to be expected given that mortgage rates have been declining since late last year, global economic uncertainty and talk of a looming recession in the US are staving off many aspects of hot seller's market—think bidding wars, fast sales and huge price escalations—at least for now."