Record Low Inventory, Median Price Up
The NAR reports Existing-Home Sales Fell 6.6% in February
Key Details
- Existing-home sales fell 6.6% in February to a seasonally-adjusted annual rate of 6.22 million.
- Despite the decline in February sales are still 9.1% higher than last year.
- The median existing-home sales price rose to $313,000, 15.8% higher from one year ago, with all regions posting double-digit price gains.
- February marks 108 straight months of year-over-year gains.
- As of the end of February, housing inventory remained at a record-low of 1.03 million units
- Inventory is down by 29.5% year-over-year – a record decline.
- Properties typically sold in 20 days, also a record low.
- Seventy-four percent of the homes sold in February 2021 were on the market for less than a month.
Regional Details
- Northeast Down 11.5%
- South Down 6.1%
- West Up 4.6%
- Midwest Down 14.4%
Existing Home Sales Data
Lawrence Yun Comments
- “Despite the drop in home sales for February – which I would attribute to historically-low inventory – the market is still outperforming pre-pandemic levels.”
- “I still expect this year’s sales to be ahead of last year’s, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy.”
- “Many Americans have been saving money and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”
- “Home affordability is weakening. Various stimulus packages are expected and they will indeed help, but an increase in inventory is the best way to address surging home costs.”
Yun is the NAR’s chief economist.
Existing home sales are reported at closing. New home sales are reported at contract signing.
Yun wants an increase in inventory. Assume more people people put their homes on the market. Where will they move? Unless to an apartment, there is no gain in inventory.
There will be increasing inventory of homes as Boomers die off. Otherwise, inventory and lack thereof is a function of new home construction and desire to buy a home, not existing homes placed on the market.
Meanwhile, part of the demand is a renewed faith that home prices will once again “always go up”.
Finally, many of those who want to move from the Midwest find they cannot get enough from their existing home to move to a place more desirable.
Mish
In CT, it’s the same horde of conniving flippers, fleecing first time buyers and newbie investors. It’ll end just as badly as other times for those left holding the bag.
It will be interesting to see how this play out.
Pre-pandemic, the housing shortage was mainly due to the large inventory being converted into airbnb short term rentals. Lots of people bought many properties to use as airbnb.
I can only guess that they must be seriously under water by now.
Then you have tenants staying rent free for more than one year and counting.
Anyone who has managed property knows that once the tenants are in arrears it’s impossible to collect rent. On top of this you have lots of young people who decided to go live with their parents or friends to avoid having to deal with eviction later. So vacancy rates must be high.
Yet, multifamily buildings are selling at record high prices and so are houses as Fed is stampeding everyone into real assets with their crazy policies.
Then when you drive to commercial centers or business parks there is an eerie feeling, parkings are barely 10% occupied, office buildings are almost empty, so are shopping centers. Doesn’t look like a booming economy. I hope to be wrong but it seems that the depression hasn’t started yet.
In Manhattan we have a bifurcated market . Contracts to buy Manhattan luxury homes are outpacing their pre-pandemic levels thanks to discounts and optimism about New York City’s reopening a year after the lockdown. Rentals on the other hand are sitting and prices keep getting marked down. One luxury building near me has dropped rents by several hundred to over a thousand dollars.
I know of bidding wars in San Diego, and things go fast and are stupidly expensive in the PNW. Lets see how that goes after the moratoriums expire at the end of the month…
Yeah, inventory low here in Oregon, but we’ve had a year of eviction moratoriums and here I think we have another 6 months on that clock.
At some point, dot-gov has to let the real home owners collect rent/mortgages, including back-rent and back mortgages. Hard to imagine what that will look like, other than tons of bankruptcies and evictions.
Too much money chasing after too few assets. At some point, the homebuilders will overbuild and people will think they can buy homes and rent them. Between the tech bubble and real estate bubble, the 2020s feel more like the mother of all bubbles.
Meanwhile Amazon is watching every breath of every driver:
Record low supply and high demand, seems like 2021 will be another year of double digit price increases.
Lawrence Yun & NAR have lost credibility long ago, decades ago I would say. During the great recession, NAR’s forecast claimed only in 1 quarter should we see real estate price declines. Just one. When your job compensates you to not understand subject matter, then it will be so. Cost of lumber is through the roof right now. Doesn’t incentivize developers to build lower priced homes. They claim interest rates drive the housing market, yet its jobs. If low interest rates were the only factor, then in the early 80s, we should have seen depressed buying, but not the case. NAR has been a clown organization for years
In my area of Eastern NC, I’ve kept pretty close tabs on inventory.
Last year there were 70 homes for sale here.
Now? There are 33, less than half.
The ones that are on the market still are typically more than 4x the median home or 4x less.
Anything around median price (250k) is gone in a day.
Inventory is DEFINITELY lower.
However, inventory is a strange animal. How many homes are on the market is a product of many things. Often, if people are thinking of moving they will need to consider the cost of buying new, and may change their minds when they start looking at the newer higher prices.
I personally think “inventory” is a bogus measure of true inventory. “Available inventory” is more a measure of how many people are moving, rather than a true count of actual inventory.