The number of homes for sale keeps hitting historic lows, as CoreLogic reports that available homes for sales equated to a 3-month supply in December 2019—falling from 3.7 months in December 2018.
Home priced in the lowest tier—0-75% of the median list price—had a 3.4-month supply in December 2019, which is a drop from the prior year’s 3.9 months of supply.
The low-to-middle-price tier saw supply fall from 2.7 months to 2.1 months and the middle-to-moderate-rice tier had a 2.3 monthly supply in December when it had a supply of 3-month supply in December 2018.
The supply of homes in the highest-price tier fell from 4.5 months to 3.7 months.
The tightening supply of homes for sales is causing the homes that are available to sell much quicker than before. CoreLogic reports that 28.1% of homes sold in less than 30 days. This was less than 15% in January 2000.
The number of homes for sale on the market for more than 180 days in December 2019 was 19.1%, which was 1.7 percentage points lower than December 2018. This is less than half of the August 2011 peak of 39.9%.
Nation-wide inventory fell 7.2% annually in December 2019. Of the 20 metros tracked, 19 reported declines in supply in the month compared to the previous year. San Diego had the largest supply decline, falling 2.2 months from 4 months in December 2018 to 2.8 months in December 2019.
An additional report from Freddie Mac estimates that 2.5 million additional housing units will be needed to make up for the current housing shortage.
“We are in the midst of a demographic tailwind, and we expect home purchase demand will remain strong well into the next decade as the peak cohorts of Millennials turn thirty years of age in 2020 and beyond,” said Sam Khater, Freddie Mac’s Chief Economist.
Freddie Mac reports there are 29 states with a housing supply deficit and when considering these states, the housing-supply shortage grows from 2.5 million units to 3.3 million units.
“Simply put, new-housing supply is not keeping up with rising demand. We estimate that the housing market is undersupplied by 3.3 million units, and the shortage is rising by about 300,000 units a year. More than half of all states have a housing shortage, and the shortage is no longer concentrated in coastal markets but is spreading to the middle of the country in more affordable states like Texas and Minnesota,” Khater said.