Home buyers struggle with record low inventory

Home buyers have few properties than ever to choose from. In December the number of homes listed for sale in the U.S. dipped to its lowest ever level, below 700,000, realtor.com reported in its Monthly Housing Trends Report.

At the same time, demand from buyers remains high, and that has resulted in more bidding wars for those homes that are listed for sale. Not surprisingly, home prices have risen by double-digits compared to where they were last year.

“The shortage of homes for sale has been an ongoing issue for the last couple of years, but in December, the combination of the holiday inventory slowdown and the pandemic buying trend caused it to dip to its lowest level in history,” said realtor.com chief economist Danielle Hale. “Looking forward, we could see new lows in the next couple of months as buyers remain relatively active, but a surge of new COVID-19 cases may slow the number of sellers entering the market.”

Hale did say that she expects more inventory will eventually appear on the market, but perhaps not until the second half of 2021.

“Until then, finding a home will continue to be a top challenge for buyers across all price ranges,” she said.

Altogether, the number of home listings has fallen by almost 40% compared to December 2019, which means around 449,000 fewer homes to choose from.

The metros with the largest declines in new listings compared to a year ago are Nashville (-19.9%); Memphis, Tenn. (-18.5%); and Charlotte, N.C. (-16%).

Not every city is the same though, and lucky buyers in a few areas are spoiled for choice. In San Jose, Calif., and San Francisco for example, there was a significant year-over-year uptick in new listings in December 2020, up 123.8% and 98.9%, respectively. Several tech companies in both markets have expressed a long-term commitment to remote work, which may have prompted more residents there to move.

Overall, list prices rose steadily in December 2020. The median listing price rose 13.4% year-over-year in that month to $340,000. However, that is a slight decrease from its previous peak of $350,000 earlier in the year. The metros seeing the largest list price gains were: Austin, Texas (up 20%); Riverside-San Bernardino, Calif. (up 17.2%); and New Orleans (up 16.8%).