According to realtor.com’s January Monthly Housing Trends Report, national housing inventory declined 13.6% in January, representing the steepest year-over-year decrease in more than four years.
In turn, the supply of for-sale homes in the U.S. has hit its lowest level since realtor.com began tracking the data in 2012.
January’s steep year-over-year decline amounted to a national loss of 164,000 listings, tightening the grip of the housing shortage plaguing the U.S. Based on realtor.com data, it shows no signs of easing in the near future, as the volume of newly listed properties also declined by 10.6% since last year.
“Home buyers took advantage of low mortgage rates and stable listing prices to drive sales higher at the end of 2019, further depleting the already limited inventory of homes for sale. With fewer homes coming up for sale, we’ve hit another new low of for sale-listings in January,” says Danielle Hale, realtor.com’s chief economist.
“This is a challenging sign for the large numbers of Millennial and Gen Z buyers coming into the housing market this home-buying season, as it implies the potential for rising prices and fast-selling homes – a competitive market,” she adds. “In fact, markets such as San Jose in northern California, which saw inventory down nearly 40 percent last month, are also seeing prices grow by 10 percent, while homes are selling at a blistering pace of 51 days.”
The supply shortage is found at every price tier throughout the U.S., but it is especially pronounced at the entry level. In January, properties priced under $200,000 declined by 19%, an acceleration compared to December’s decline of 18.1%.
The decline in inventory of mid-tier properties priced between $200,000 and $750,000 also accelerated, to a decline of 12% year-over-year, compared to December’s 10.2% decline.
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%.
As inventory reached its lowest point on record, both listing prices and days on market reacted to the imbalance of supply and demand. The median U.S. listing price grew by 3.4% year-over-year, to $299,995 in January, while prices in 18 metros grew by more than 10%.
Of the 50 largest metros, 46 saw year-over-year gains in median listing prices, with Philadelphia as the nation’s standout, with a 16% increase over last year. Additionally, with the lack of supply, homes are selling in an average of 86 days, two days more quickly than January of last year.
The metros that saw the largest declines in housing inventory were San Jose-Sunnyvale-Santa Clara, Calif. (-37.3 percent); Phoenix-Mesa-Scottsdale, Ariz. (-35.4 percent); and San Diego-Carlsbad, Calif. (-34.0 percent). Other markets across the country where housing supply had sharp declines included Denver-Aurora-Lakewood, Colo. (-28.8 percent); Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md. (-27.8 percent); and Cincinnati, Ohio-Ky.-Ind. (-24.4 percent).
Only two of the 50 largest metros saw inventory increase year-over-year: Minneapolis-St. Paul-Bloomington, Minn.-Wis. (+9.4 percent); and San Antonio-New Braunfels, Texas (+8.4 percent).
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md. (+16.0 percent); Rochester, N.Y. (+15.0 percent); and Phoenix-Mesa-Scottsdale, Ariz. (+14.5 percent) posted the highest year-over-year median list price growth in January. Other markets across the country where housing prices shot up included Memphis, Tenn.-Miss.-Ark. (+13.7 percent); and Indianapolis-Carmel-Anderson, Ind. (+12.9 percent).
The steepest price declines were seen in Louisville/Jefferson County, Ky.-Ind. (-4.0 percent); Minneapolis-St. Paul-Bloomington, Minn.-Wis. (-2.0 percent); and Houston-The Woodlands-Sugarland, Texas (-1.9 percent). However, each of these markets saw yearly price declines decelerate compared to December.