The
supply of homes for sale has been shrinking for six months and shows no
improvement so far in January a bad sign for buyers. New listings of
existing homes for sale were down 14% year-over-year in the first two
weeks of January, according to Realtor.com, which tracks 143 markets
nationwide.
In
Phoenix, where prices were up 24% in November from a year earlier, new
listings through the first three weeks of January hit their lowest level
in 13 years, says Mike Orr, real estate expert at the W.P. Carey School
of Business at Arizona State University.
That's bad news for buyers, and it means "prices need to go up more" to bring more sellers to market, Orr says.
Nationwide,
the supply of existing homes for sale fell to 4.4 months in December,
based on the current monthly sales pace, says the National Association
of Realtors. That's the lowest level in more than seven years. A
six-month supply is generally considered balanced between buyers and
sellers.
Home
prices in November were 7.4% higher on average than a year earlier,
according to CoreLogic. Real estate experts had expected that rising
prices would spur more sellers trapped by years of falling prices.
Instead,
January's listing data "is the same sad story," says Glenn Kelman, CEO
of online brokerage Redfin. If sellers don't have to sell, "they're
holding on, thinking they'll wait for prices to go up even more."
Redfin's
data, covering 19 major markets mostly in the West, shows new listings
down 29% the first two weeks of January vs. last year.
Scarce
sellers aren't the only driver of shrinking supplies. There are fewer
distressed properties for sale. Foreclosure sales were down 7% through
the first nine months of last year from the same period in 2011,
RealtyTrac says.
Meanwhile,
demand is up. Existing home sales were up 9.2% last year, NAR's
preliminary data show. New-home sales rose almost 20% in 2012, the
government reported Friday, while supply fell to 4.9 months in December
from 5.4 months a year before.
New
home construction is still weak. In each of the past three years,
builders completed fewer than 500,000 single-family homes. That's less
than half the number built annually between 1993 and 2007, according to
the Census Bureau.
Home
builders would need to double production this year to alleviate the
tight supply, estimates Lawrence Yun, NAR's chief economist. That's not
expected. Home supplies nationally will stay at about the five-month
level much of the year, Yun predicts. Some markets are far below that.
California's supply of existing single-family homes for sale stood at
2.6 months in December, the California Association of Realtors says.
"Nobody
is selling because no one has anywhere to go," says Barbara
Hendrickson, of Red Oak Realty in Berkeley, in the San Francisco Bay
Area, which had a 1.8-month supply in December.
The
low supply is feeding bidding wars. One of Hendrickson's clients
recently lost a bid despite offering $130,000 above the home's $775,000
asking price, Hendrickson says.
Whether
the supply of homes for sale will expand to meet rising demand is a
"big question for the market" in 2013, says Jed Kolko, economist with
real estate website Trulia.
This year is also the first since the housing bust began that falling inventories are not necessarily a good thing, he says.
Listings may still swell in time for the busy spring selling season, says Stan Humphries, Zillow economist.
He
says listing activity next month will be key. If it doesn't pick up by
then, the spring season is likely to bring a lot of price increases, he
says.
Source: USA Today
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