Median home prices are on an upward climb and inventory is remains low, but buyers are more determined that ever to unleash pent-up demand and purchase homes in these markets.
A recent report from Realtor.com found that homebuyers' demand for housing in a market with very little inventory is causing home prices to rise.
“Listings are growing as they normally do this time of the year, but because demand has been growing faster than supply, homes are selling faster,” said Jonathan Smoke, Chief Economist of Realtor.com. “So the monthly trend is the normal seasonal pattern, but the year-over-year decline is reflective of demand being stronger than supply for more than a year, which is resulting in fewer homes available and faster-moving inventory.”
Realtor.com projects that the median list price for March is $238,000, up 3 percent from February and 8 percent year-over-year. Inventory is expected to expand by 3 percent in March but will not completely resolve the supply issue.
“Would-be buyers face a dilemma: There will be more homes on the market over each week of the next three to four months, but there will also be even more prospective buyers,” Smoke explained. “We are entering the busiest season of home buying with the lowest amount of inventory in three years. To be competitive, buyers should get pre-approved for a mortgage and be ready to act quickly if they find a home that meets their needs.
Last month, new single-family home sales failed to impress, dropping nearly 10 percent, while existing-home sales saw little movement. Many in the industry are a bit skeptical of a turnaround this month due to a lack of inventory.
According to data estimates from the U.S. Census Bureau and HUD, new single-family home sales in January 2016 were at a seasonally adjusted annual rate of 494,000, down 9.2 percent from the revised December rate of 544,000 and 5.2 percent below the January 2015 estimate of 521,000.
Ralph B. McLaughlin, Chief Economist at Trulia noted, "New home sales in January start off weak, but the 12-month rolling total looks solid. The share of new homes purchased that haven't started construction sits near a 10-year high, likely reflecting a fall in inventory of existing homes. All new home sales numbers from the U.S. Census are extremely volatile: the margin of error is wide and often includes zero, which means we can't be certain whether the month-over-month or year-over-year changes actually increased, decreased, or stayed flat."
The existing-home sales report from the National Association of Realtors (NAR) proves that lenders are well on the path to recovery from TRID delays. The report found that existing-home sales increased 0.4 percent to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December. Existing sales are now 11.0 percent higher than a year ago, the highest annual rate in six months and the largest year-over-year gain since 16.3 percent July 2013.
Supply and demand troubles have been constant burdens on the housing market's recovery, and Ten-X.com (formerly Auction.com) predicts that existing-home sales will be affected by the lack of options in the market.
Realtor.com's Hottest Real Estate Markets in March 2016:
- San Francisco, California
- Vallejo, California
- Denver, Colorado
- Santa Cruz, California
- Dallas, Texas
- San Jose, California
- Santa Rosa, California
- Sacramento, California
- San Diego, California
- Stockton, California