Even though the new year began with list prices 11.1 percent higher than they were a year ago and at least 4.9 million homeowners have been freed from negative equity since 2012, inventories of listings are only 2.7 percent higher on December 30 than they were a year ago.
Record low inventories last January set the stage for a selling season featuring soaring prices, bidding wars and the outbreak of price bubbles in several California markets. The improved conditions for sellers prompted many to list their homes, but not enough to measurable improve the inventory picture as real estate markets go into hibernation to prepare for the 2014 season.
The national housing inventory of listings from the 54 cities tracked by HousingTracker’s weekly metro survey on December 30 was 676,170 single family homes and condos, only 4.1 percent higher than 648,938 listings in January 2013, the lowest housing inventory level ever recorded in the Department of Numbers database.
Realtor.com also reported inventory numbers close to last year’s levels. The total U.S. for-sale inventory of single family homes, condos, townhomes and co-ops declined in November from 1,905,064 to 1,846,155 units in its database of MLS listings from 146 markets. November listings were only 0.18 percent above levels of November 2012, when inventories in the Realtor.com database had already begun the dramatic decline that culminated in the spring, 2013 shortages.
The geography of the current inventory declines changed in November. California markets dominated the list earlier in the year, but with the exception of Santa Barbara and Orange County, California markets have been replaced in the top ten declining markets by two Florida markets-which appear to be reentering a second stage of their recovery process–as well as Middlesex-Somerset-Hunterdon NJ, Boulder and Denver CO, Honolulu HI, Detroit MI and, most recently, St. Louis. Santa Barbara reported a 21.24 percent annualized decline listings; the balance all reported year-over-year inventory declines in double digits.
Despite the remarkable price gains in 2013-exceeding 13 percent through the third quarter in the latest Case-Shiller numbers and the freeing of millions of owners from negative equity sellers seem to be pulling back. Recent consumer surveys have tracked a significant decline in consumer confidence in home price expectations. In the November Fannie Mae survey, consumers who said prices are going to increase within the next 12 months fell to 45 percent and the average home price change expectation dipped to 2.5 percent from 2.9 percent. In addition, the share of those who expect mortgage rates to climb in the next 12 months remained at an elevated level since it spiked in June. (See Consumers Remain Negative on Housing).
With inventory levels enter the winter at virtually the same level last year, should seller remain leery of the market, inventories may not restock sufficiently to meet buyer demand next spring, setting the stage for a repeat of last year’s wild spring and summer conditions.
For-Sale Inventory: November 2013
10 MSAs with the Greatest Year-Over-Year Inventory Reductions