The number of homes for sale plunged by nearly 10% annually in November at a time when low interest rates are increasing buyer demand, according to realtor.com®’s November 2019 Housing Trends report. The shortage of homes is accelerating: Inventories in November dropped 9.5% annually compared to 6.9% annually in October.
“As millennials—the largest cohort of buyers in U.S. history—embrace homeownership and take advantage of this year’s unexpectedly low mortgage rates, demand is outstripping supply, causing inventory to vanish,” says George Ratiu, realtor.com®’s chief economist. “The housing shortage is felt acutely at the entry-level of the market, where most millennials are looking to break into the market for their first home.” Further, Ratiu says that sellers appear to be reluctant to list their homes during the colder months when the market typically sees a seasonal slowdown.
Last month’s inventory declines equated to about a decrease of 131,000 listings nationwide compared to a year ago. The volume of new listings coming to the market fell by 7.7% compared to last year.
Affordable homes are hardest to find. The inventory of homes priced below $200,000 dropped 16.5% year-over-year in November. Homes priced between $200,000 to $750,000—considered mid-tier inventory—decreased 7.4% year-over-year, while high-end inventory above $1 million fell 1.7% year-over-year, realtor.com® reports.
"The inventory decreases seen across all value ranges could in part be attributed to a spill-over effect, as the lack of inventory has pushed buyers up the price chain to stretch their budgets and search for homes above their initial price target," Ratiu says.
The markets seeing the largest annual drops in inventory in November were San Diego, down 28.1%; Phoenix, down 24.1%; and Rochester, N.Y., down 22.4%.
On the other hand, only a few of the 50 largest metro saw an increase in inventory year-over-year, including Las Vegas, up 14.4%; Minneapolis, up 11.5%; and San Antonio, Texas, up 7.2%.
Source: realtor.com®
