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Curious Case: A U.S. Housing Market No One Saw Coming

December 10 2019

November inventory drops 9.5 percent year-over-year; homes priced below $200,000 decreased by a substantial 16.5 percent

SANTA CLARA, Calif., Dec. 9, 2019 -- What a difference a year makes. In November 2018, higher mortgage rates and increasing inventory characterized the U.S. housing market. This November, the number of homes for sale fell nearly 10 percent year-over-year in a market where low interest rates are spurring increased demand, according to the November 2019 Housing Trends report released today by®.

"As millennials -- the largest cohort of buyers in U.S. history -- embrace homeownership and take advantage of this year's unexpectedly low mortgage rates, demand is outstripping supply, causing inventory to vanish," according to senior economist, George Ratiu. "The housing shortage is felt acutely at the entry-level of the market, where most millennials are looking to break into the market for their first home."

Ratiu added, "The issue is further compounded by the fact that sellers tend to be more reluctant to list during the colder time of year when the market typically makes a seasonal slowdown."

Based on's listing data, the shortage of available homes for sale is accelerating. Overall, inventory declined 9.5 percent in November, compared to October's drop of 6.9 percent.

November's inventory declines amounted to a loss of 131,000 listings nationwide, compared to this time last year. In the nation's 50 largest metros, inventory declined by 8.8 percent year-over-year. Additionally, the volume of new listings hitting the market has decreased by 7.7 percent since last year, adding to the nation's inventory woes.

Finding an affordable home still remains one of the largest obstacles to homebuyers, and is predicted to continue to be a problem for many buyers heading into 2020. The inventory of homes priced below $200,000 decreased by a substantial 16.5 percent year-over-year in November, up from the 15.2 percent decrease seen in October. Inventory decreases were the norm across all price points in November. Mid-tier inventory priced between $200,000 and $750,000 also decreased by 7.4 percent year-over-year compared to October's year-over-year drop of 4.3 percent, while high-end inventory priced above $1 million decreased by 1.7 percent year-over-year, compared to October's year-over-year increase of 1.3 percent.

"The inventory decreases seen across all value ranges could in part be attributed to a spill-over effect, as the lack of inventory has pushed buyers up the price chain to stretch their budgets and search for homes above their initial price target," Ratiu noted.

The metros with the sharpest drops in inventory were San Diego (-28.1 percent); Phoenix (-24.1 percent); and Rochester, N.Y. (-22.4 percent). Only four of the 50 largest metros saw inventory increase year-over-year. The largest inventory increases were in Las Vegas (+14.4 percent); Minneapolis (+11.5 percent); and San Antonio, Texas (+7.2 percent).

Facing even fewer options than last year, eager buyers are acting quickly to close on the few homes that are currently available. During November, home sold in an average of 70 days nationally, two days more quickly than last year. Raleigh, N.C.; Hartford, Conn.; and Birmingham, Ala.; saw the largest declines in days on market with properties spending 10, 10, and 9, fewer days on the market than last year, respectively. Conversely, properties in some of metros found homes sitting on the market longer. Homes in Los Angeles; San Jose, Calif. and Las Vegas sold 20, 12, and 10 days more slowly than last year, respectively.

Meanwhile, the national median home price has yet to adjust to the recent inventory declines after a multi-month run up in inventory earlier this year. The median U.S. listing price grew by only 3.6 percent year-over-year, to $309,000 in November, which is less than the 4.3 percent year-over-year increase seen last month. However, of the 50 largest U.S. metros, 43 saw year-over-year gains in median listing prices. Los Angeles (+16.6 percent); Rochester, N.Y. (+12.8 percent); and Birmingham, Ala. (+12.3 percent); saw the highest year-over-year median list price growth in November. Conversely, the steepest price declines were seen in Louisville, Ky. (-4.0 percent); Minneapolis (-2.0 percent); and Houston (-1.6 percent).

Metros Seeing the Largest Declines in Inventory


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