Housing inventory in the U.S. increased in November, shifting the balance of supply and demand more toward home buyers’ favor.
According to a recent report from Redfin, the inventory of available residential real estate gained 5 percent in November when compared to the same time last year. Meanwhile, home prices increased 3.3 percent in November year-over-year to a median of $298,800. November marked the third straight month of annual home price gains under 4 percent after a 77-month streak of yearly price gains exceeding 4 percent.
“The tide has turned,” said Redfin chief economist Daryl Fairweather. “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.”
Completed Home Sales & Inventory Changes
The number of completed home sales dropped at a faster rate than it had in two years, down 8.3 percent from November 2017. Home sales fell in 65 of the 74 largest metros that Redfin tracks. Only four metro areas saw an increase in completed home sales greater than 5 percent: New Orleans (+9.4 percent), Tampa (+7.2 percent), Long Island (+7.1 percent) and Orlando (+6.5 percent).
As home sales continue to slide, the inventory of homes on the market is growing. The number of homes for sale in November was 4.9 percent higher than a year ago — the highest level of residential real estate inventory growth seen since June 2015. This also marked the eighth straight month that the year-over-year figure increased.
Redfin warns that while inventory is on the rise nationally, the numbers mask a wide variation among individual metros. Inventory is skyrocketing in metros such as San Jose (+123.2 percent), Seattle (+96.5 percent) and Oakland (+60.3 percent). However, other metros such as Philadelphia, Camden and New Orleans are seeing sharp declines in available homes for sale, with inventories changes of -24.0 percent, -19.8 percent and -19.1 percent, respectively.
Days on the Market & Home Sale Prices
According to the Redfin report, the typical home that sold in November went under contract in a median of 44 days, two days faster than the same month last year. Earlier in 2018, the fastest markets saw homes go under contract in as little as 10 days; however, those same markets that were the hottest in spring are showing the steepest declines this fall.
In November, 19 percent of homes sold for more than the list price, which is down 22.2 percent from last year. Meanwhile, homes that had a price drop fell slightly from an all-time high of 31.2 percent in October to 24.6 percent in November.
Homes that went under contract within two weeks also decreased, falling from 26.9 percent last November to 24.5 percent this November.
- Boston was the fastest market, with half of all homes pending sale in just 17 days, up from 15 days from a year earlier. Grand Rapids, MI and Oakland, CA were the next fastest markets with 19 and 21 median days on market, followed by Indianapolis (22) and Omaha, NE (22).
- The most competitive market in November was San Francisco where 60.9% of homes sold above list price, followed by 48.7% in Oakland, CA, 45.2% in San Jose, CA, 37.7% in Tacoma, WA, and 37.0% in Buffalo, NY.
- 0 out of 73 metros saw sales surge by double digits from last year. New Orleans led the nation in year-over-year sales growth, up 9.4%, followed by Tampa, FL, up 7.2%. Long Island, NY rounded out the top three with sales up 7.1% from a year ago.
- Honolulu saw the largest decline in sales since last year, falling 25.8%. Home sales in Detroit and Seattle declined by 21.7% and 21.2%, respectively.