Wednesday, June 13, 2012

Redfin: House prices increased 2.2% Year-over-year in May

by Bill McBride on 6/13/2012 11:51:00 AM

Another house price index, this one is based on price per sq ft ...

From Redfin: May Real Estate Prices Increase 2.2% as Inventory Continues to Fall

Redfin today released a new 19-market analysis of May home prices, sales volume and inventory levels. The Redfin Real-Time Price Tracker ... showed an annual price gain of 2.2% and a monthly gain of 2.7%. Inventory levels were down 23.5% compared to last year, and down 1.7% compared to last month. Sales volume was up 7.4% over this time last year, and pending sales were up even more, by 10.7%.

“We expected real estate to soften in May along with the larger economy, but we actually saw home prices continue to increase,” said Redfin CEO Glenn Kelman. “This trend seems likely to hold at least through mid-summer. Redfin’s business saw a stronger-than-expected rebound from Memorial Day weekend: with rates low and rents high more new home-buyers were touring homes last weekend, and more are now writing offers. The limit on sales volume is inventory. Not enough sellers have stepped in to provide the liquidity that once came from banks with foreclosures to sell.”

“The 2011 decline in inventory was seasonal and largely expected,” said Tim Ellis, Redfin’s real estate analyst. “But once the trend continued into the outset of 2012′s home-buying cycle, inventory shocks resulted in the first sharp price increases for many areas in five years.”
There is limited historical data for this index. In 2011, sales were fairly weak in the May through July period, and a 7.4% increase in year-over-year sales would be less than the 10% year-over-year increase in April.

The reported 23.5% decrease in inventory is similar to other sources and is a key driver for the small year-over-year price increase.