Supply of homes starts to catch up with sales
As prices rise, more sellers are testing the market.
The supply of newly listed homes for sale is starting to show signs of keeping pace with buyer activity in some of the nation’s hottest real estate markets, new data suggest.
In 21 of 24 major metropolitan markets tracked by residential brokerage ZipRealty, new listings outnumbered new sales contracts for the 30 days ended March 15.
Supply may “finally start to keep pace with frenzied buyer activity,” says Lanny Baker, ZipRealty CEO.
Home sellers in Los Angeles, for instance, put 16,170 homes on the market from mid-February to mid-March. At the same time, only 9,533 homes entered sales contracts.
Other cities seeing the same situation included Phoenix — where January home prices were up 23% year-over-year, Standard & Poor’s Case-Shiller data shows — the San Francisco Bay Area, Denver and Houston. San Francisco home prices followed Phoenix’s gain with an almost 18% pop in January year-over-year.
Meanwhile, new pending sales outnumbered new listings only in Las Vegas, Raleigh, N.C., and Washington, D.C., ZipRealty says.
Nationally, the supply of homes for sale stood at 4.7 months in February, meaning they’d all sell in that time frame if no new supply were added, the National Association of Realtors says. That’s up from 4.3 months the previous month.
Generally, Realtors consider a six-month to seven-month supply to be a balanced market between buyers and sellers.
Tighter-than-normal supply has helped lift prices and led to multiple offers in many markets.
In seven of the cities analyzed by ZipRealty, more than one-fourth of the homes listed for sale sold in less than seven days. Those cities were Las Vegas, Orange County and Sacramento in California; Denver; Washington, D.C.; Seattle; and Austin, Texas.
The lower-than-normal supply is also putting a drag on sales, Realtors and market watchers say.
The Phoenix market has about 20,000 homes listed for sale. That’s about 13,000 fewer than would be normal, says Mike Orr, real estate expert at the W.P Carey School of Business at Arizona State University.
“The biggest problem we have is supply,” Orr says.
In Orange County, the inventory of single-family homes and condominiums listed for sale has risen 10% since April 1, says Steven Thomas, of trade publication Reports on Housing. That’s the biggest expansion in about two year
Some homeowners are “testing the waters and attempting to fetch prices that are just way too off the mark,” he says. He expects inventories to keep growing as those homes sit longer.
Some Sacramento-area home sellers are likewise being too zealous with prices, says Joanie Cubias, of Lyon Real Estate. More appraisals are now falling short as sellers over-price, she says.
If homes are priced right, however, “There’s 10 buyers for every house,” Cubias says, especially for homes priced below $350,000.