Starter-home sales rise
In October, starter-home sales posted a significant 4.9% year over year increase. This is the 14th consecutive month of increase, showing the market is allowing for new-buyers to get their foot in the door. The increase is also a major jump in comparison to other parts of the market, sales of mid-priced homes inched up 0.7% and high-priced home sales rose 0.8%. However the increase in sales is not contributing to a price increase. According to a Redfin analysis, starter home prices only rose an estimated 2% year over year. The average price in October was $260,000. Notably this is the second slowest growth in the past decade.
The minimal rise in price is likely due to an increased supply. Currently, inventory is at its highest October level since 2016. Major metro areas saw a large increase in starter homes sold year-over-year, this includes San Francisco (19.5%), Providence (6.3%) and Portland (12.9%).
“The starter-home market is a double-edged sword right now. Conditions are improving, with more listings and steadier prices, but many buyers are only turning to this tier because they have been priced out of higher tiers,” said Redfin Head of Economic Research Chen Zhao. “That means sales at the low end of the market are relatively strong, but it also means that first-time buyers may find themselves competing with move-up or move-down buyers.”
