Supply and demand image via Shutterstock.
An analysis of listings data released today by realtor.com suggests that homes continued to turn over quickly in October, in defiance of seasonal patterns and in spite of price increases driven by inventory shortages in many markets.
The 1.9 million homes listed on realtor.com during October had been on the market for 94 days on average — up slightly from 93 days in September, but down 11.3 percent from a year ago, indicating demand for housing remains strong. Realtor.com rival Zillow reported a similar trend last week.
With inventory down 1.5 percent from a year ago, the median list price of homes listed on realtor.com was up 7.6 percent, to $199,000.
Although the country is still experiencing “significant supply shortages,” inventories are “stabilizing” compared to the dramatic year-over-year declines seen earlier this year, realtor.com said in releasing October data.
Realtor.com said the number of markets where inventories were down by 5 percent or more from a year ago declined from 102 in June to 65 in October. Inventory grew in 49 markets in June, up from 22 in June.
Among the top 10 metros with the shortest days on market, only Washington, D.C., saw age of inventory decline from September to October. Phoenix remained flat, and the other eight markets saw increases in average time on market.
Top 10 metros with shortest days on market
|San Jose, Calif.||48|
“This demonstrates that the overall strength of the national housing market is determined partly by inventory availability,” said National Association of Realtors Chief Economist Lawrence Yun in a statement. “We expect rising home price conditions to continue through the balance of the year.”
Price appreciation instills confidence in buyers and helps lift homeowners out from “underwater,” allowing them to put their homes up for sale without taking a loss. Data aggregator CoreLogic has estimated that at the end of June, 7.1 million homeowners owed more on their mortgages than their homes were worth.
This year, limited inventories have kept a lid on sales. For real estate agents and brokers, home sales are the critical number.
According to the most recent figures from NAR, the inventory of existing homes for sale in September remained flat at 2.21 million, representing a five-month supply of homes. Existing-home sales declined 1.9 percent from August to September, to a seasonally adjusted annual rate of 5.29 million.
Earlier this month, Yun forecast that home prices will continue to post gains next year, but that sales of existing homes will be flat due to factors including declining affordability, limited inventory and tight mortgage lending standards.
When the final numbers for 2013 are in, NAR’s top economist expects sales of existing homes will be up 10 percent from last year, to 5.13 million, but will hold steady at 5.12 million next year. Yun is forecasting that there will be inventory shortages again next spring, because builders would have to boost housing starts by 50 percent to meet underlying demand.
Homes repossessed by lenders could also ease inventory shortages in coming months as loan servicers clear backlogs in “judicial foreclosure” states where courts handle the process.
The number of properties headed to the auction block climbed for the 16th month in a row in October, according to the latest report from foreclosure data aggregator RealtyTrac.