Real estate sales cooled, but prices continued to rise in 2017 in Portland’s residential market as eager buyers snapped up available homes, according to newly released year-end data.

The historically low inventories of recent years eased in 2017. Portland was one of only four large markets in the U.S. that added to its homes inventory last year, according to Realtor.com data published by The New York Times.

“I would characterize it as one of the strongest markets we’ve had in years in terms of growth and price appreciation,” said Edward Petrossian, president of the Portland Metropolitan Association of Realtors and a broker for RE/MAX Equity Group.

Closed sales fell 3.6 percent year over year, according to RMLS, a real estate listing service. Sales slipped precipitously in December, down 10.3 percent compared to December 2016.

Home prices continued to appreciate in 2017, according RMLS’ year-end data. The median home price rose 9 percent to $379,900, up from $347,000 in 2016.

New listings jumped in December, with 1,617. It was the strongest December showing for new listings since 2011.

Portland ended the year with 1.6 months of inventory, still far below what industry experts consider a balanced market. Homes had little trouble selling in 2017: They spent an average of 50 days on the market, down from 62 days in 2016.

The RMLS data cover the Portland-metro area, including Tigard, Hillsboro, Gresham, Troutdale, Beaverton and other suburbs.

New construction is making an impact, with homes coming online in areas such as Cornelius, West Linn, Oregon City and Gresham, Petrossian said.

“New construction is coming on very strong, and I expect to see more this year,” he said.

That’s in line with national trends, said George Ratiu, managing director of housing and commercial research for the National Association of Realtors.

“Our expectation is that inventory, nationally speaking, will increase in 2018, in part because we expect builders to ramp up production of new homes,” Ratiu said. “How much remains to be seen because consumers have obviously been driving the demand side.”

Higher inventory levels in Portland are reflected by slowing population growth, Ratiu said. Although still healthy, population growth in the Portland area slipped to 1.5 percent in 2016, according to the Census Bureau. Data for 2017 weren’t yet available, but a state economic forecast pegged population growth last year at 1.8 percent.

“Population growth in the Portland-metro area – which had been very, very strong in the early 2000s – has been slowing down,” Ratiu said.

Meanwhile, home construction has been increasing. Building permits for single-family homes and condos were on track to reach nearly 17,000 by the end of 2017 in the Portland metropolitan statistical area. That compares to an average of 13,200 from 2013 to 2016.

“You are returning back to prerecession levels,” Ratiu said. “It’s good news. It means the supply is increasing.”

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Portland’s single-family real estate market is poised for another spring and summer of tight inventory and rising prices, agents say.

Portland has less than two months of inventory, and it’s only going to get tighter, said Kerri Hartnett, president of the Portland Metropolitan Association of Realtors and a Keller Williams agent.

“We’re pretty much in a seller’s market on steroids, if you will,” Hartnett said. “I kind of see that continuing. Every spring between April and July or August, that’s when the market really takes to tightening. I feel like it’s going to get tighter.”

Any further appreciation would exacerbate Portland’s already costly home prices.

In February, the median sales price for Portland-metro homes hit $353,400, up 12 percent from a year ago, according to RMLS, a real-estate listing service. That was also a 1 percent increase from January.

Hartnett said a lender she works with calculated that homes in close-in Portland are appreciating at a rate of $134 a day, or about $49,000 a year.

“Until our inventory does increase, we’re going to see appreciation for sure,” she said.

As the spring homebuying season commences, brokers are busy.

“I’m seeing heavy activity on buyers and we’re beginning to see some new listings,” said Edward Petrossian, president-elect of the Realtors’ association and a RE/MAX Equity Group broker.

Houses that sold in February spent an average of 62 days on the market.

“We still have multiple offers on listings, and buyers have to really work hard to get what they want,” Petrossian said.

Realtors are watching the state Legislature closely for changes that could affect them. House Bill 2006, for instance, would eliminate the mortgage interest deduction for second homes, and cap it for homebuyers with gross income of $200,000 for joint returns and $100,000 for single tax filings.

“That would affect us adversely,” Petrossian said.

Job growth in Portland can be expected to continue to support the housing market, but higher prices are beginning to make a dent in buying power, he said.

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