The widening gap between supply and demand for residential real estate led to record sales growth and a seven-year price high in October, according to Redfin.
Home sales rose 23.9% year over year – the largest annual increase since Redfin began collecting data in 2012 – and rose 3.8% from September. Due to the high level of activity, average prices rose to $ 335,900, a 14.2% year-over-year increase – the second largest growth since 2012 – and 0.9% from the previous month.
The inventory of goods for sale fell compared to the previous year and the previous month by 22.1% and 1.4% to a total of 1.66 million units.
"October was probably the hottest real estate market this year," Redfin chief economist Daryl Fairweather said in the report. "Buyers who withdrew from the market at the beginning of the pandemic had made up for lost time, which made prices soaring."
Home sales grew annually in all of the 85 largest real estate markets in the United States, led by 71.3% in Bridgeport, Connecticut, 54% in Elgin, Illinois, and 53.9% in New Haven, Connecticut.
With the exception of a 0.8% annual decrease in Honolulu, all other metros saw average prices increase. Bridgeport had the highest value at 39.4%, followed by 30.1% in Memphis, Tennessee, and 23.5% in Newark, New Jersey.
Only three markets saw an annual increase in properties for sale. San Francisco was up 48.4%, New York was up 25.4%, and San Jose, California was up 3.7%. This comes from reports of a pandemic and work-related exodus from major cities. Allentown, Pennsylvania saw the largest drop in sales at 50.2%, followed by 49.4% in Kansas City, Missouri, and 49.1% in Salt Lake City – the most competitive metropolitan area in September and October.
While the typical annual slowdown was avoided at the beginning of the fourth quarter, 2020 was far from typical. COVID-19 infection rates and subsequent restrictions are rising in November, dampening prospects for the months ahead.
"Given that we are entering a winter wave of the pandemic, residential demand is likely to lose some of its steam by 2021, cooling the market from scorching to just hot," Fairweather continued. "If you're a seller, waiting until the New Year to list your home is probably a good idea. However, if you're a buyer, there is a short window of time when competition is likely to end as intense as it was in October. "