People wait to visit a home for sale in Floral Park, Nassau County, New York.
Wang Ying | Xinhua News Agency | Getty Images
The spring home market is emerging as the leanest and most competitive ever.
A sharp decline in new registrations, partly due to storms, combined with an already record-low supply, will make it increasingly difficult for buyers to find their dream home at the perfect price.
According to a new calculation by realtor.com, almost half as many houses were up for sale at the end of February than a year earlier. The low supply was exacerbated by a decline in the number of new listings on the market.
“Last month’s record coldness and blizzards have likely caused salespeople to take a break, if only temporarily,” said Danielle Hale, chief economist at realtor.com. “However, in today’s starved inventory market, any setback is significant.”
A sellers’ withdrawal resulted in around 207,000 fewer homes being offered for sale in the first two months of 2021 than the average for the same period over the past four years. To catch up, new registrations would have to grow 25% annually in March and April, which is unlikely.
While the largest declines in supply were in Oklahoma City and Kansas City, Missouri, declines were widespread across the country. The only major cities that grew populations were San Jose, California, and San Francisco and Denver.
The increasingly scarce supply of houses for sale continues to stir up the fire below property prices. According to CoreLogic, prices rose a little more than 10% year over year in January. Rising mortgage rates are now hurting affordability, but so far have not thrown cold water on property prices.
The tight supply has only made sellers more optimistic about their potential profits. Asking prices for newly listed homes hit an all-time high of $ 347,475 in February, according to Redfin.
Salespeople have reason enough to feel safe. Redfin also found that just over half (55%) of the homes that were signed in February did so within the first two weeks on the market. A year ago, this share was 44%.
“In the past few weeks, winter storms have disrupted the real estate market and mortgage rates have risen sharply,” said Daryl Fairweather, Redfin ‘s chief economist. “While pending sales and new listings have had a small hit in the last few weeks, home price increases are showing no signs of slowing.”
While the effects of winter storms should only be temporary, higher mortgage rates will further hurt affordability and could mean fewer bidding wars over the course of the spring market.