A record shortage of homes for sale drove prices up on a monthly and annual basis.
U.S. home-sale prices increased 6.9% year over year in December to a median of $312,500 across the 217 metros Redfin tracks. Home prices were also up 1.1% month over month on a seasonally-adjusted basis, the largest increase since February 2018.
“Low mortgage rates and a strong economy fueled homebuyer demand in December, which boosted both home sales and prices,” said Redfin chief economist Daryl Fairweather. “Prices heated up in West Coast metros like Seattle and Los Angeles, which indicates the slowdown of 2019 has officially ended in these markets.”
Prices continued to increase the fastest in affordable metro areas in December. Among the 20 metro areas with the largest year-over-year price increases, 16 were below the national median, led in December by Memphis (median price $190,000, up 15.9%), Camden, NJ ($195,000, +14.7%) and Cincinnati ($187,000, +14.4%).
For the more expensive metro areas, a boost in the loan limits for mortgages backed by FHA, VA, Fannie Mae and Freddie Mac that takes effect in January could impact affordability and put upward pressure on home prices in the sweet spot of the limit increases. The new limit for most of the country is $510,400, up from $484,350 in 2019, while the limit in high-cost areas has increased to $765,600, up from $726,525 in 2019.
Of the 85 largest metro areas Redfin tracks, only two saw a year-over-year decline in the median sale price: In New York, home prices were down 2.4%—possibly as a result of the increase in New York City’s “mansion tax” on homes priced above $1 million. In San Francisco, they fell 1.7%.
Nationwide, home sales increased 6.8% year over year in December, the fifth consecutive month of increases, and were up 1.0% from November on a seasonally-adjusted basis.
The markets with the biggest increases in home sales from a year ago were Anaheim, CA (37.7%), North Port, FL (35.8%) and New Haven, CT (23.0%). Compared to a year ago, the biggest declines in the number of homes for sale were in Salt Lake City (-54.7%), Tacoma, WA (-44.3%) and San Diego, CA (-40.3%).
The most competitive market in December was San Francisco where 51.6% of homes sold above list price, followed by Oakland at 44.4%, Tacoma at 41.8%, San Jose at 40.0% and Los Angeles at 36.7%.