The national median home-sale prices rose 14.4% year-over-year to $336,000 in February 2021, the largest increase since July 2013, according to a report from Redfin. However, a shortage of homes is responsible for the increase in the number of homes that sold above list price in February.
According to the report, a shortage of homes increased buyer competition causing 36% of homes sold in February to go for more than their asking price, the second largest share on record.
"This is the strongest seller's market since at least 2006," said Redfin chief economist Daryl Fairweather. "Buyers outnumber sellers by such a huge margin that many homeowners are staying put because they know how hard it would be to find a place to move to. It seems like the only move-up buyers who are confident enough to list their homes are those who are relocating to a more affordable area where they'll have an edge on the local competition."
"Even though the market feels reminiscent of 2006, we aren't in a bubble," added Fairweather. "Yes, some buyers are overpaying for homes, particularly those who are moving to affordable destinations and paying well over asking prices to win homes in bidding wars. But these buyers are often covering any shortfall in the bank's appraisal amount and locking in low monthly mortgage payments that they can easily afford. As mortgage rates rise, I expect demand to settle down and be better balanced by more new listings as high home prices lure more sellers to the market."
The report also revealed that closed home sales were up 5% year-over-year and pending sales increased 21%. Additionally, new listings dipped 16%, the second-largest decline since Redfin's data which dates back to 2021, according to the report.
Click here to explore the full report from Redfin.
