More homes coming onto the market in the US, latest data shows
After plunging throughout 2012 and for much of 2013, and rising only modestly through the beginning of this year, the number of new homes coming onto the market in the US surged in May.
The latest data from real estate firm Zillow shows that inventory of all for sale homes nationwide jumping 11.8% year on year with most gains among homes priced in the middle and top one third of home values.
The number of homes available for sale in the most affordable price bracket, those homes most sought by first time buyers, fell year on year in 28 of the nation's largest metro areas analysed by Zillow.
The total number of homes listed for sale on Zillow in May was up 4.3% month on month and has risen monthly in each of the past three months on a seasonally adjusted basis.
Overall inventory of for sale homes was up year in 78% of the more than 600 metro areas analysed. Large metros where inventory has increased the most include Las Vegas up 51.5% year on year, Washington, DC up 45.7% and Riverside, California up 42.7%.
‘It's good to see overall inventory rising. It's likely that many would be sellers have decided to capitalize on recent home value gains, particularly as the pace slows, and list their home for sale now in order to move into a new home while mortgage interest rates remain low,’ said Zillow chief economist Stan Humphries.
‘But persistent inventory constraints at the low end of the market continue to make it a tough environment for first time and lower income home buyers. Low inventory and high demand can lead to rapid price spikes, which make homes even more difficult to afford for many buyers. Hopefully the inventory gains we're seeing in the middle and upper tiers of the market will begin trickling down to the most affordable homes soon,’ he explained.
In addition to low numbers of affordable homes for sale, first time and lower income home buyers armed with traditional financing are also competing with all cash buyers at the lower end of the market.
Zillow data shows that in 27 of the top 30 metros more than one third of all sales of the lowest priced homes were made with cash. In three of the top 30 metros, Tampa, Detroit and Miami, more than 80% of all sales in the lowest price bracket were cash deals.
National home values in May were up 0.1% from April to a Zillow Home Value Index of $172,300, and have now risen for 28 consecutive months. Year on year, home values rose 5.4% in May, the slowest annual pace of appreciation in more than a year.
For the 12 month period from May 2014 to May 2015, national home values are expected to rise another 2.9% to approximately $177,321, according to the Zillow Home Value Forecast.
National rents fell slightly in May from April, down 0.1% to a Zillow Rent Index of $1,310. Year on year, national rents were up 2.3% in May.