Housing Inventory Increases as House Prices Moderate
After years of an inventory shortage in the housing market, conditions are finally improving. By the end of April, there were 1.83 million existing homes available for sale, up from 1.67 million a month ago and 1.8 million a year ago. At the current sales pace, it would take 4.2 months for the current housing stock to sell; this is up from the 3.8-month supply of homes on the market in March and the 4-month supply in April 2018. This all adds up to buyers having more choices when looking for homes. Yet sellers will also have to adapt to the new market conditions, as an increase in inventory often leads to a slowdown in price growth. According to Lawrence Yun, chief economist for the National Association of Realtors, “When placing their home on the market, home sellers need to be very realistic and aware of the current conditions.”
Existing-home sales saw a slight decline of 0.4% in April. Of the four major housing regions in the country, two—the Northeast and South—reported a small decline in sales, while in the Midwest sales remained unchanged from the month before. The West, meanwhile, reported gains. Yun expects to see growth in sales in the coming months. “First, we are seeing historically low mortgage rates combined with a pent-up demand to buy, so buyers will look to take advantage of these conditions.” In addition, gains on the job creation front will lead to an increase in wages, which will help offset increases in home prices and improve affordability.
From “For Sale” to “Sold”
One sign of the pent-up demand among buyers is the short amount of time homes are remaining on the market. In April, the average house took only 24 days to sell; this is significantly less time than the 36 days and 26 days properties remained on market in March 2019 and April 2018, respectively. Fifty-three percent of all homes sold in April were sold in less than a month.
Northeast – Existing-home sales annual rate of 640,000; a decrease of 4.5% from both March 2019 and April 2018. The median price increased 0.9% from April 2018.
Midwest – Existing-home sales annual rate of 1.17 million; unchanged from March 2019, but a decrease of 7.9% from April 2018. The median price increased 5.5% from April 2018.
South – Existing-home sales annual rate of 2.27 million; a decrease of 0.4% from March 2019 and 1.7% from April 2018. The median price increased 4.4% from April 2018.
West – Existing-home sales annual rate of 1.11 million; an increase of 1.8% from March 2019, but a decrease of 5.9% from April 2018. The median price increased 1.3% from April 2018.