December saw the largest year-over-year decline of housing inventory in almost three years with a dramatic 12 percent decline, pushing the number of homes for sale in the U.S. to the lowest level since January 2018 according to the December 2019 Housing Trends report released this week by realtor.com®.
Based on realtor.com®‘s analysis, the inventory decline is accelerating across all price levels, including the luxury market. In December, inventory of homes priced under $200,000 declined by 18.1 percent year-over-year, higher than the 16.5 percent drop in November. Mid-tier housing priced between $200,000 and $750,000 also declined at an accelerated pace, up 10.2 percent year-over-year compared to November’s decline of 7.4 percent. Listings of homes priced over $1 million shrunk by 4.4 percent year-over-year, up from from nearly 2 percent in November.
“The market is struggling with a large housing undersupply just as 4.8 million millennials are reaching 30-years of age in 2020, a prime age for many to purchase their first home,” according to realtor.com Senior Economist, George Ratiu in a press release. “The significant inventory drop we saw in December is a harbinger of the continuing imbalance expected to plague this year’s markets, as the number of homes for sale are poised to reach historically low levels.”
The inventory shortage gripping the U.S. housing market is showing no signs of slowing anytime soon. December’s 12 percent year-over-year inventory decline is an acceleration from November’s drop of 9.5 percent, and equates to a loss of nearly 155,000 listings compared to December 2018. Additionally, new listings are failing to restore the market to equilibrium as the volume of newly listed properties also declined by 11.2 percent year-over-year.
On a local level, the tech havens of San Jose-Sunnyvale-Santa Clara, Calif.; Seattle-Tacoma-Bellevue, Wash; and San Francisco-Oakland-Hayward, Calif. all saw inventory declines of more than 30 percent in December as well as listing price growth above the national median. Only three of the 50 largest U.S. metros saw inventory increase over the year: San Antonio-New Braunfels, Texas (+8.8 percent); Minneapolis-St. Paul-Bloomington, Minn.-Wis. (+7.4 percent); and Las Vegas-Henderson-Paradise, Nev. (+4.8 percent), which all had year-over-year declines in their median listing prices.
Overall, the median U.S. listing price grew by 3 percent, to $299,950 in December, which is a deceleration compared to last month, when the median listing price grew by 3.6 percent over the year. At the same time, price growth is continuing to heat up in metros where inventory declines were greatest in December.
Of the 50 largest U.S. metros, 42 saw year-over-year gains in median listing prices, with 33 of the 50 growing faster than the national rate and 12 of those growing faster than December 2017’s rate of 8.2 percent. Los Angeles-Long Beach-Anaheim, Calif. (+21.0 percent); Philadelphia-Camden-Wilmington, Pa.-N.J.-Del.-Md. (+13.1 percent); and Birmingham-Hoover, Ala. (+11.1 percent); posted the highest year-over-year median list price growth in December. All three markets also saw double-digit declines in their housing inventories. The steepest price declines were seen in Louisville/Jefferson County, Ky.-Ind. (-5.0 percent); Minneapolis-St. Paul-Bloomington, Minn.-Wis. (-4.1 percent); and Houston-The Woodlands-Sugarland, Texas (-2.9 percent).
In December, 13.2 percent of active listings saw their listing prices reduced, virtually unchanged from a year ago. Among the nation’s 50 largest metros, 15 saw an increase in their share of price reductions compared to this time last year. Portland-Vancouver-Hillsboro, Ore.-Wash. saw the greatest increase in the share of price reductions in November, up 14.7 percent year-over-year. It was followed by Indianapolis-Carmel-Anderson, Ind. (+3.1 percent) and Houston-The Woodlands-Sugarland, Texas (+2.6 percent).
Nationally, homes sold in 79 days in December 2019, two days more quickly than December 2018. However, in the 50 largest U.S. metros, the typical home sold at a nearly identical pace. Raleigh, N.C.; Oklahoma City, Okla.; and Rochester, N.Y.; saw the largest decreases in days on market with properties spending 13, 11, and 8 fewer days on the market than last year, respectively. Meanwhile, properties in Los Angeles-Long Beach-Anaheim, Calif.; Buffalo-Cheektowaga-Niagara Falls, N.Y.; and Boston-Cambridge-Newton, Mass.-N.H.; sold 22, 10, and 9 days more slowly, respectively.