If you’re shopping for a cheap home this spring, good luck. The median value of homes listed for sale in March hit $300,000, a new record, according to realtor.com.
Home values overheated from 2016 to mid-2018, as demand outstripped supply, especially at the lower end of the market. Those gains began to shrink last summer, as mortgage rates rose. The difference this spring is that there continues to be a shortage of entry-level homes for sale, but the supply of higher-end homes is rising.
“Despite a slowing growth rate, home prices will likely continue to set new records later this year,” said Danielle Hale, realtor.com’s chief economist. “Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions.”
The number of homes for sale that were listed above $750,000 increased 11% year-over-year in March, while the number of entry-level homes priced $200,000 or below fell 9%.
“A buyer’s experience will vary notably depending on the market and price point they’re targeting,” added Hale.
Of the nation’s 50 largest metropolitan housing markets, St. Louis, Washington, D.C., and Oklahoma City saw the biggest annual drop in the supply of homes listed for sale, down 19%, 14% and 11%, respectively. For-sale inventory continued to increase, however, in more pricey West Coast markets. In San Jose, CA, there were 114% more listings, in Seattle, 77% more and in San Francisco 44% more than a year ago.
The increase in supply also means homes are selling at a slower pace so far this spring, two days slower on average. Cities like Kansas City, Indianapolis and Hartford, CT are seeing bigger delays, with the increase in days on market in the double digits. Meanwhile Pittsburgh, Cleveland and Oklahoma City are seeing homes sell much faster than last year.