After almost four years of decline, housing supply has increased in the US for third month
After nearly four years of annual declines in supply, the number of homes for sale has now increased year on year in the United States for three months in a row, the latest index shows.
Inventory increased by 0.4% in November but levels are still well below where they were five years ago but it is a vast improvement on the decline of 9.1% recorded a year ago, the data from real estate firm Zillow reveals.
The figures also show that the median house prices in the US is 7.7% higher than November 2017 at $222,800 and the median rent is 0.5% higher at $1,449.
Some of the markets that previously were among the hottest in the country are seeing the biggest increases in available homes, but these are also the places where restricted inventory created more competition for potential buyers.
However, the number of homes available to buyers in Kansas City, Las Vegas, and Washington D.C., fell at a double digit pace in November, a sign that the inventory recovery has not reached every market.
‘After years of intense inventory shortages and cutthroat competition, any gains in inventory should be embraced by home buyers. Unfortunately, the small recent gains are not nearly enough to fully erase the existing deficit, nor are they evenly distributed as there are roughly twice as many homes available for sale in the higher reaches of the market than there are at the lower, more competitive end,’ said Zillow senior economist Aaron Terrazas.
‘Rather than calling this a true inventory recovery, it’s probably more accurate to say that inventory levels are no longer in a free fall and are currently bumping along the bottom. And unfortunately, it’s looking increasingly unlikely that we’ll see a meaningful upward surge in inventory any time soon,’ he explained.
‘Building activity has been sluggish at best. And potential sellers may now be thinking twice about listing their home for sale in a rapidly rising interest rate environment, when a similar home to the one they’re already in, let alone a larger or more expensive one, is likely to cost them more per month. This is a step in the right direction, but there’s a long way to go,’ he added.
Home values have increased the most in Las Vegas and Atlanta, with the median home value in each metro increasing by more than 13%. But while Atlanta surpassed its bubble peak value in mid 2017, the Las Vegas market is still 12.5% below the highest point it reached during the housing bubble.
While rents saw a slight increase in November after three months of flat or even declining costs, annual rent appreciation slowed since early 2018, even seeing slight declines in the fall.
Orlando and Riverside in California saw the biggest increases in rents, up 4.4% and 3.9% respectively. Rents in Portland, Oregon, Seattle and New York declined the most. Portland rents have now declined for five consecutive months, after growing 4.6% annually a year ago.