Housing inventory continues to tighten
According to the February Trulia Price Monitor, asking prices for homes listed on their site rose 3.2 percent, and the company says that inventory is unlikely to rise this year, aside from regular seasonal fluctuations. Trulia notes, “Although inventory remains tight, it is now falling less sharply than it had been. Inventory declined fastest in the six months just after prices bottomed in February 2012.”
Likewise, Zillow reports that the number of homes for sale on their site fell 17 percent in February compared to February 2012, which they state indicates an “ongoing, nationwide inventory shortage.” Although the inventory shortage continues, inventory levels are evening out and are no longer plummeting.
Housing inventory levels across America
Zillow reports that nationally, the greatest annual decreases in inventory were among the most expensive homes. Inventory levels of top-tier homes fell 20.5 percent year-over-year, while middle-tier homes fell 17.2 percent and bottom-tier homes fell 9.1 percent year-over-year.
Asking prices rose 1.4 percent in February, according to Trulia, marking the largest monthly gain since the home-price recovery began, with the largest annual price gains seen in Phoenix, Las Vegas, and Oakland. The company asserts that since Phoenix, Miami, Detroit, Houston, and Oklahoma City were the first to see housing prices bottom out, they will likely be the first markets where inventory levels will expand.
As Zillow reports a 17.0 percent drop in the number of homes for sale, the study reveals that the annual drop was less severe than in January which could indicate some easing of the tight housing inventory levels. Rising home values are expected to enable more owners to list homes in the future, further easing the inventory squeeze.
“It’s important to be patient”
“The supply of for-sale listings continues to dry up, driven in part by potential sellers trapped in negative equity and homeowners that won’t sell out of fear they won’t be able to find a suitable home to buy later,” said Zillow Chief Economist Dr. Stan Humphries. “But the impact of constrained inventory will create the solution to the problem. Over the past year, inventory tightness has contributed to increases in home values in many markets.”
Dr. Humphries continued, “As home values rise, some homeowners will be freed from negative equity and able to list their homes, which will contribute to an easing of the inventory crunch. While this inventory is coming, it may still be a frustrating spring for buyers vying for what inventory is available. It’s important to be patient and not commit to paying beyond one’s comfort level in the heat of negotiations.”