Realtor.com: Housing inventory hits multi-year lows nationally

Realtor.com has released a report showing that U.S. housing inventory has declined to its lowest point since the company began tracking it in 2012.

National inventory declined by 13.6% from January 2019 to January 2020, amounting to a loss of 164,000 listings. That’s a faster rate of decline compared to the 12.0% year-over-year drop in December and the largest year-over-year decline in 4.5 years. Inventory in large markets decreased by 14.1%.

The volume of newly listed properties has also declined by 10.6% since last year.

Without any sign of homeowners significantly adding to the number of homes for sale, the market will look to builders for help alleviating the housing crunch. However, Realtor.com noted that even with an above-average pace of construction, it could take builders four to five years to solve the gap between the housing supply and demand.

The demand-supply imbalance is especially pronounced at entry-level price points. In January, the decline in inventory of lower-tier properties priced at under $200,000 was  19.0%, an acceleration compared to a decline of 18.1% in December, and the decline in inventory of mid-tier properties priced between $200,000 and $750,000 also accelerated, to a 12.0% year-over-year drop in January compared to a 10.2% decline in December. Even upper-tier properties priced at more than $750,000 declined by 5.9% year-over-year compared to December’s decline of 4.4%.

Housing inventory in the 50 largest U.S. metros declined by 14.1% year-over-year in January as the nation’s largest metros fared no better than other housing markets across the country. The metros which saw the biggest declines in inventory were the San Jose-Sunnyvale, California, metro area (-37.3%); Phoenix-Mesa-Scottsdale, Arizona, (-35.4%); and San Diego-Carlsbad, California, (-34.0%). Only two of the 50 metros saw inventory increase over the year: Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin, (+9.4%); and San Antonio-New Braunfels, Texas (+8.4%).

As inventory has reached its lowest point on record, the typical property is selling more quickly than last year. Nationally, homes sold in 86 days in January, two days more quickly than January of last year. In the 50 largest U.S. metros, the typical home sold one day more quickly than last year. Hartford-West Hartford-East Hartford, CT; Raleigh, North Carolina;  and Oklahoma City, Oklahoma; saw the largest decreases in days on market with properties spending 13, 13 and 12 fewer days on the market than last year, respectively. Meanwhile, properties in Las Vegas-Henderson-Paradise, Nevada; Boston-Cambridge-Newton, Massachusetts-New Hampshire; and Detroit-Warren-Dearborn, Michigan; sold 7, 7 and 6 days more slowly, respectively.

The median U.S. listing price grew by 3.4%, to $299,995 in January, which is a slight acceleration compared to last month, when the median listing price grew by 3.0 percent over the year. However, a re-acceleration in prices is visible in the count of metros where listing prices have grown by more than 10% over the past year. In January, listing prices in 18 metros grew by more than 10%, while only 6 hit this milestone one month previously in December.

Of the largest 50 metros, 46 saw year-over-year gains in median listing prices. The Philadelphia-Camden metro area (+16.0%); Rochester, New York (+15.0%); and  Phoenix-Mesa-Scottsdale, Arizona (+14.5%) posted the highest year-over-year median list price growth in January. The steepest price declines were seen in Louisville/Jefferson County, Kentucky-Indiana (-4.0%); Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin (-2.0%); and Houston-The Woodlands-Sugarland, Texas (-1.9%). However, each of these markets saw yearly declines decelerate compared to last month.

In January, 15.4% of active listings saw their listing prices reduced. The share of listings with reduced prices decreased slightly over the past year, by 0.5%, while the share of listings which saw their price increased rose by 0.4%. Among the nation’s largest markets, 17 still saw an increase in their share of price reductions compared to last year. Sacramento–Roseville, California, saw the greatest increase in price reductions in January, up 12.2%. It was followed by Indianapolis-Carmel-Anderson, IN (+5.2%) and Pittsburgh (+3.9%).

Metros Seeing the Largest Declines in Inventory

Metro                                        Active Listing Count YoY   Median Listing Price  Median Listing Price YoY   Median Days on Market  Median Days on Market Y-Y
San Jose-Sunnyvale, CA                          -37.3%                $1,099,500                              10.1%                                        51                                                 -2
Phoenix-Mesa-Scottsdale, AZ                -35.4%                  $399,750                               14.5%                                        63                                                  0
San Diego-Carlsbad, CA                          -34.0%                  $734,500                               11.0%                                        48                                                  2
Seattle-Tacoma-Bellevue, WA                -31.5%                  $599,625                                6.2%                                         67                                                  3
San Francisco-Oakland-Hayward, CA  -30.5%                  $907,500                               9.7%                                         49                                                  1
Denver-Aurora-Lakewood, CO               -28.8%                 $532,450                                8.2%                                        63                                                  3
Sacramento–Roseville, CA                       -28.3%                 $499,950                               11.2%                                        60                                                -4
Philadelphia-Camden, PA-NJ                 -27.8%                  $289,900                              16.0%                                       84                                                  1
Virginia Beach-Norfolk, VA                     -26.4%                  $309,950                              10.7%                                        75                                                  1
Cincinnati, OH-KY-IN                                -24.4%                 $267,400                              11.7%                                         76                                                 2