In the heart of the busiest season for housing, homesellers are pulling back.
New listings in April fell 1.1 percent from a year ago, according to Redfin, a national real estate brokerage. That may not seem like a lot, but with the number of homes for sale extremely low and demand for homes high, the drop in new listings is unexpected and unwelcome. The reason has less to do with buyer demand and more to do with seller anxiety.
“Trade-up buyers seem to be losing their mojo heading into the heart of the spring selling season,” said Redfin chief economist Nela Richardson. “Repeat buyers tend to list early because they are most often also looking for another home to buy in the near future. A slowdown in new listings reflects a lack of confidence on the part of the homeowner that they can find a desirable home to purchase.”
The supply problem, therefore, feeds on itself, especially in the hottest housing markets. Boston, New York and Philadelphia saw year-over-year declines in new listings of more than 10 percent, according to Redfin.
The tight supply had been pushing prices higher, but, nationally at least, those gains may have reached a tipping point. April continued a now three-month streak where home-price growth fell below the 12 month average of 5.6 percent.
In the tightest markets, though, prices are still soaring. The San Francisco Bay Area did see a jump in inventory, likely because it also saw a record high median home price in April of $686,000, according to CoreLogic.
“It’s no surprise that in a month when the San Francisco Bay Area’s median home sale price hit a record high the region also logged a year-over-year decline in sales, which remained well below the long-term average,” said Andrew LePage, research analyst with CoreLogic. “Low mortgage rates, job growth and other drivers have stoked demand, but the supply of homes for sale — especially in the low-to-middle price ranges — hasn’t kept pace, leaving many would-be buyers struggling with a thin and increasingly expensive inventory.”
Home sales increased 2.5 percent nationally, and inventory fell 3.2 percent year over year in April, the seventh-straight month of declines, according to Redfin. Inventory is at historic lows in Seattle, Portland, Oregon, and Denver, and given the lack of new listings, it will likely go lower.
The tight conditions are fueling buyer competition. Nearly 78 percent of offers written by Redfin in Seattle were involved in bidding wars. In Denver and Portland, that share climbed to 67 and 69 percent respectively.
The overall market is getting very little help from homebuilders, who are increasing production but at nowhere near the levels of current or even historical demand. Builders blame the high costs of land, labor and increased regulation for the slow recovery in construction.