Dive Brief:
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Realtor.com released its rankings of the 20 hottest real estate markets for September, with California occupying half the spots and Colorado, Texas and Michigan picking up two slots each.
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Year over year sales were up 4% in September 2015, defying the usual slowdown that comes during back-to-school season. September's median home price, $250,000, stayed consistent from August but was a record-setting 9% higher than a year ago.
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Although September saw higher-than-average activity this year, the market experienced a slowdown in sales rates from August, with houses taking an average of five more days to sell (a total of 77 days). That's three days less than it took homes to sell in September 2015.
Dive Insight
The real estate website determines its "hot" list by studying the markets where properties are selling the fastest (median days on market) and where demand is strongest (listing views). Homes in these metros typically sell in 23 days, which is 43 days faster than those in the overall market, and they get 1.4 to 3.7 more Realtor.com page views. While seasonal market sluggishness, for the most part, has been delayed, fewer for-sale homes are coming online and inventory is shrinking when it can least afford to.
Realtor.com Chief Economist Jonathan Smoke said this month's inventory situation is just a repeat of what we've seen in the market so far this year: low supply, big demand and high prices.
Low inventory is also the culprit behind a 2.4% August slide in pending home sales. Additionally, an inadequate pace of desperately needed housing starts could slam the brakes on the current market recovery, said NAR Chief Economist Lawrence Yun. Both Zillow and Trulia reported recent upticks in housing stock in certain areas of the country — primarily California and Florida — but not at high enough levels to turn the national inventory picture around. Nationwide, inventory has fallen 5% to 7% in the last year.
The lack of inventory is one of the factors that has contributed to the approximate 5% annual increase in housing prices, which has kept homeownership out of the reach of many, particularly the cash-strapped, first-time homebuyer. However, last month Zillow reported that income growth had finally started to outpace home value increases, making it possible for potential buyers to start saving for down payments.
