Home prices continued to increase in May as speed and competition hit new highs, according to Redfin, an online real estate brokerage.
Home prices increased 6.8% to a median home price of $288,000. Home sales also increased, rising 7.5% from last year, despite the continued shortage of supply.
The number of homes for sale fell 10.9% to just 2.7 months of supply, the lowest level since Redfin began tracking the market in 2010. Six months is generally considered a balanced market between buyers and sellers.
A typical home went under contract in less than 37 days in May, breaking the previous record of 40 days set in April. More than 25% of homes sold at or above their listing price, the highest percentage Redfin recorded.
The median sale-to-list price ratio also set a new record, hitting 95.4% in May.
“There is still a lot of momentum in home prices in many metros, not only on the coasts but also in places like Buffalo, Grand Rapids and Omaha,” Redfin Chief Economist Nela Richardson said. “Strong local economic growth and burgeoning demand from older Millennials are accelerating home-price growth in this very competitive, low-inventory pre-summer market.”
“The Federal Reserve’s latest announcement to raise short-term rates will have very little effect on buyer demand or on the overall housing market,” Richardson said. “If anything, it may motivate buyers to make their purchases sooner rather than later.”