Housing inventory went up by 5 percent in November, recording the fastest growth in three years, according to a report by Redfin released Thursday. It also noted a decline in sales by 8 percent.
The home-sale prices increased by 3.3 percent on a year over year basis to a median of $298,800 in November—recording the third straight month of annual home price gains under 4 percent, after a 77-month-long streak of annual home price gains exceeding 4 percent. According to Daryl Fairweather, Chief Economist at Redfin, “the tide has turned.”
"Sellers are now competing for buyers, but they haven't all realized it yet. Sellers who have adjusted their price expectations downward are still finding plenty of willing buyers. Sellers holding out for high prices are contributing to declining home sales and growing inventories. We see few signs that buyers are likely to reward their patience," she said
The number of completed homes reflected a sharp drop than it has over the past two years, falling by 8.3 percent from last month. The report also noted a decline in sales in 65 of the 74 largest metro areas that Redfin tracked.
Five percent year-over-year increase in sales was recorded in New Orleans (+9.4 percent), Tampa (+7.2 percent), Long Island (+7.1 percent), and Orlando (+6.5 percent) in November. Mortgage rates at a high percentage of 4.9 last month compared to 3.9 percent from 2014-2017 is likely to affect sales, according to Redfin.
The rise in the number of homes and rising inventory is favorable to homebuyers, shifting the balance of supply and demand back in their favor, the report noted. It also pointed out that the level of inventory growth is at its highest since June 2015. Inventory continues to rise in places like San Jose (+123.2 percent), Seattle (+96.5 percent) and Oakland (+60.3 percent).
On the other hand, Philadelphia (-24.0 percent), Camden (-19.8 percent) and New Orleans (-19.1 percent) recorded a rapid drop in inventory levels. Nationwide, the number of homes newly listed in November rose 0.3 percent year over year, the report stated.
Read the full report here.