U.S. home prices surged to new heights in September, though there are signs the country’s frenzied housing market may be cooling off, according to a new report.
The median home sold for $319,769 in the four weeks ending Sept. 27, a 14% increase from a year ago and the highest price on record, according to the report from real estate firm Redfin on Monday. U.S. home prices haven’t increased that dramatically since mid-2013.
The pandemic, which forced millions of Americans to shelter, work and school at home, has spurred intense home-buying activity. Pending sales were up 30% year-over-year in September, according to the Redfin report.
Redfin created their own measure of demand recovery, an index that in the last week of September was 34.8% higher than pre-pandemic levels in January and February.
Meanwhile, the number of active listings on the market hit a new all-time low in September, with 28% fewer homes for sale than the same time last year.
The sharp rise in demand paired with record-low supply has created a highly competitive market that is driving home prices up around the country. The average home sold for 99.4% of its asking price, the highest Redfin has ever recorded. Roughly half of all homes that went into contract in the four weeks to Sept. 27 had an offer accepted in the first two weeks on the market.
It’s a particularly unusual time of year for home prices to hit a new peak. Housing is a highly predictable seasonal market, and August and September tend to see a slowdown in activity and median home price. In both of the past two years home prices peaked in early summer before declining in the fall.
“The question on everyone’s mind is ‘how fast can prices keep rising?’” said Daryl Fairweather, Redfin’s chief economist, who noted there may be signs the “red-hot” market could start to cool.
Mortgage applications have begun to slow, and asking prices are no longer climbing as quickly from month to month, Ms. Fairweather said. “This is likely to be as good as it gets for home sellers, who definitely have had it very good for a very long time.”