Share of Homes Selling at or Above List Price Reached New Highs in August 2021
Since the pandemic began over a year ago, a supply shortage of for-sale homes has fueled home price growth. The national CoreLogic Home Price Index (HPI®) has been posting double-digit year-over-year growth since March. With mortgage rates near historical lows, some homebuyers are willing—and newly able—to pay a premium to secure their dream home. As a result, more than half of homes were sold above list price in August 2021.
Figure 1[1] shows the share of homes that sold at a price above, equal to or below the list price. Starting from July 2020, the share of homes selling at or above list price (orange and blue areas in Figure 1) reached and exceeded the previous peak in June 2005. In June 2021, that share reached a new high of 71.6% of total sales – almost five times of the level during the trough in January 2008, and almost 30 percentage points higher than March 2020 when the pandemic began.
Figure 1: Share of Sales At or Above Reached New Highs
Still, housing markets are different across the nation, and sales and listing patterns vary geographically. Figure 2 shows the share of homes that sold at, above, or below their list prices in 20 metropolitan areas during August 2021. Seattle had the largest share of homes – 78% – that sold for at least the list price. San Francisco and San Diego, followed with 77% and 75% selling for the list price or more, respectively. Miami had the lowest share – 39% – of homes selling at or above the list price in August.
Figure 2: Seattle Had the Highest Sold At or Above List Price in August
As the total supply of houses available for sale is below three months, price pressures rapidly increase. Figure 3 shows the price premium or discount and months’ supply for over 200 metropolitan areas in August 2021.
In Seattle, where the supply has been thin, homebuyers paid 4.3% more than the asking price on average. In Miami, where the months’ supply was relatively high, homebuyers were able to negotiate below asking prices, with average discounts of 3.2% in August.
Figure 3: Price Pressure Increases as Supply Drops Below 3 Months
With both for-sale inventory and mortgage rates at historically low levels, motivated homebuyers are facing strong competition in this sellers’ market. Homes are sold fast with less room for negotiation.
The increase in COVID-19 vaccine availability and adoption could help release inventory and price pressure as more potential sellers feel safer putting their homes on the market.
[1] The U.S. statistics are based on data for 68 metropolitan areas. Each of these metros has at least 50% coverage since 2000. CoreLogic MLS data coverage usually increases over time, which might also contribute to inventory increases.
