Number of US homes on the market rose in 1Q as sales slowed
Homebuyers in Salt Lake City, Atlanta and other big U.S. metropolitan areas are seeing a pickup in the number of homes for sale, especially in the most affordable segment of the market.
In Atlanta, for example, the number of homes for sale jumped 18.9% to 33,836 in the first quarter. That’s the first annual increase in two years.
Overall the U.S. inventory of homes in the bottom third of the market by price rose 3.5%, the fastest annual growth rate in at least six years, according to an analysis of the nation’s 100 largest metropolitan areas by real estate data tracker Trulia.
More homes on the market offer some relief for buyers who have been facing a stubborn shortage of properties for sale. The trend is most encouraging in markets like Atlanta, where new home listings are driving the growth in supply. That’s not the case in Los Angeles, Seattle and other cities where prices have risen rapidly. In these markets, new listings have declined, but the number of homes for sale is up because properties are sitting on the market longer.
“It’s almost like the illusion of inventory,” said Felipe Chacon, a housing economist at Trulia. “In a lot of markets, it just seems like there’s just been an exhaustion of demand as opposed to an infusion of supply.”
Many buyers still face hurdles to homeownership due to prices that have consistently risen faster than wages over the past seven years, while construction and sales listings have not kept up with pent-up demand.
Sales of previously occupied U.S. homes fell during three of the first four months of this year, despite a solid job market and lower mortgage rates.
A dearth of inventory, which drives home prices higher, remains a key impediment to U.S. home sales. The inventory of homes for sale nationally stood at 4.2 months in April, up from 3.8 months in March, according to the National Association of Realtors. The housing market has historically been considered healthy when the supply of homes for sale is closer to six months.
On a national level, the data from Trulia suggests the for-sale home inventory picture is starting to move in the right direction for buyers.
The number of U.S. homes for sale was essentially flat in the first three months of this year. That’s the first time in more than two years that the inventory of homes on the market didn’t show an annual decline. At the same time, new home listings fell 6.9% from a year earlier.
In some of the most expensive cities, homes are staying on the market longer than a year ago, while new home listings are down.
In Seattle, the median number of days a home stayed on the market jumped to 70 in the first quarter from 53 a year earlier, while new listings fell 4.8%. In San Diego, homes spent a median of 73 days on the market, up from 58 a year earlier. At the same time, new home listings dropped 5%.
And in the metropolitan area that encompasses Los Angeles, Long Beach and Anaheim, homes sat on the market a median 75 days, up from 67 a year earlier. And new home listings fell 4.5%.
In less expensive areas, the rise in inventory is being driven by the addition of homes that were not already up for sale hitting the market.
In Atlanta, inventory vaulted 18.9% mainly because new home listings jumped 14% from a year ago.
Several cities in Utah also experienced this trend. In Provo, new listings jumped 31.3%, while in Salt Lake City they climbed 10.6%.
“Basically, all the big Utah markets are legitimately seeing new supply come online,” Chacon said.
One reason home sales have been soft is the limited supply of starter houses, or homes in the lowest third of the market by price. The 3.5% jump in the number of starter homes on the market in the January-March quarter should be an encouraging sign for buyers, though new listings in the segment fell 1% from a year earlier.
The number of trade-up properties for sale also improved in the first quarter, climbing 4.8%, even as new listings fell 4.4%. Meanwhile, the inventory for premium homes fell 4.5%. The category also posted the biggest annual drop in new listings at 12.6%.
In the first quarter, the median list price of starter homes was $139,000 and made up 24% of all homes on the market. The median for trade-up homes was $249,000. They represented 31% of listings. Premium homes were 46% of properties on the market, with a median price of $464,900.