CHARLOTTE, NC (Ely Portillo/The Charlotte Observer) - Home prices in the Charlotte region rose 4.2 percent in October compared to the same month a year ago, the Charlotte Regional Realtor Association said Friday.
They pointed at the low number of homes on the market as a leading cause. The supply of housing in Charlotte has been much smaller than historical averages in recent years, as building lagged the recovering housing market.
In October, the average house in Charlotte cost $267,615. That's up from $256,812 in the same month last year.
The number of houses for sale plunged 18.9 percent from last year, however. There's currently a 2.4-month supply of houses on the market, less than half of what's considered normal for a balanced market.
"Even though our region has been challenged by prolonged low inventory, buyer demand is still strong. Pending contract numbers continue to rise, and we're seeing increased showings per listing across the Charlotte MSA," said association president Roger Parham, in a statement.
Houses sold even faster, as buyers competed for the shrinking supply. The average amount of time a house spent on the market, from listing to close, was 89 days for October sales. That's down 15 days from 2016, which means houses in the Charlotte region are selling more than two weeks faster than they were a year ago.
The inventory squeeze means more sellers are hesitant to put their houses on the market, because they might not be able to find something comparable to buy when they move. That leads to a worsening cycle that lowers inventory even further.
Builders haven't been able to keep up with demand and produce enough new houses. Some are shifting to build more speculative houses because of the strong demand. Taylor Morrison, which is building about 300 houses in the Charlotte market this year, typically builds about 30 percent of its houses on a speculative basis and 70 percent for custom buyers, said Jodi Mosser, vice president of sales and marketing.
But this year, they've increased the ratio of speculative houses to about 50 percent, because there's enough demand to sell them rapidly to buyers as soon as the houses are complete.