Housing-Inventory Crunch Could Be Easing

The Wall Street Journal

14 June 2013

Housing inventory has jumped by 25% so far this year, outpacing normal seasonal increases, according to figures released Thursday by Realtor.com.

There were some 1.85 million homes listed for sale at the beginning of May, which is still historically low. May’s listings rose by 5.8% from April’s level but stood 10% below year-earlier levels. They were still the lowest for the month of May since Realtor.com began its count in 2007.

Still, the upturn in listings so far this year suggests rising home prices are encouraging more buyers to test the market. So far this year inventories have increased by around 375,000 through April compared to increases of just 45,000 for the same period in 2011 and 108,000 in 2012. Still, the increase is lower than the jump of 442,000 in 2010, when tax credits fueled a surge in housing demand.

Compared with one year ago, inventories in 15 of 146 markets stood above their year-earlier levels in May, with gains of 3.4% in Atlanta, 2.8% in Miami, and 1.8% in Tuscon, Ariz. Inventories stood just 1.9% below last year’s levels in Sacramento, Calif., and were down by 1.1% in Phoenix. Those markets have all witnessed significant home-price gains over the past year as the supplies of homes for sale have plunged.

A separate report released Thursday from Zillow showed that inventories at the beginning of June were down 12.2% from one year ago, compared to a year-over-year drop of 17.5% in January.

Inventories have dropped over the past two years as banks have slowed down foreclosures and as investors have bought more homes with an eye towards renting them out. Many sellers, meanwhile, have held their homes off the market because they’re unwilling or unable to sell at big discounts.

A survey released earlier this week by Fannie Mae found that 40% of Americans believed it was a good time to sell, up from 30% in April. That was the highest reading since Fannie began its survey three years ago.

Even with the increases, inventories in many markets remain tight, but any easing in the extreme shortages of the past year could ultimately cool the pace at which home prices have been rising. Real-estate firms have said that housing sales have been constrained over the past year in part due to a shortage of listings.

The Realtor.com figures include sale listings from more than 800 multiple-listing services across the country. They don’t cover all homes for sale, including those that are “for sale by owner” and newly constructed homes that aren’t always listed by the services.

The six markets with the largest year-over-year inventory declines were all in California. Listings were down by 43.4% in Orange County compared with last May, though they increased by 16.5% from April. Listings fell by 36.5% in Los Angeles; 35.3% in San Jose; 34.7% in Oakland; 33% in Ventura; and 32.2% in San Diego.

Nationally, median asking prices rose by 4.8% from one year ago, and by 2.1% from April. Asking prices stood above last year’s levels in 112 markets, led by Sacramento (42.3%) and Oakland (38.3%). Asking prices dropped by 8.9% in Springfield, Ill., and by 5.5% in Little Rock, Ark.

Half of all homes listed for sale at the beginning of May had been on the market for less than 79 days. The median age of listings stood at just 16 days in Oakland and was below 30 days in San Jose, Seattle and Denver.