According to the latest data from Realtor.com, first-time homebuyers are facing a challenging situation in the current real estate market. The data, which analyzes housing inventory in the top 300 metro areas, reveals a lack of immediate relief in sight.
Decrease in Active Inventory
In July, the number of homes available across the US decreased by 6.4% compared to the previous year. Additionally, new home listings, referring to properties appearing on the market for the first time, fell by a significant 21% from the same period the year before.
Insufficient Supply and Diminished Buyer Demand
Hannah Jones, economic data analyst at Realtor.com, explains that summer traditionally brings robust buyer demand and increased home supply due to families making big changes between school terms. However, this summer has witnessed lower buyer demand compared to previous years, while the housing supply has remained limited.
As a result, fierce competition among buyers is occurring in many areas despite the reduced number of potential buyers. Jones highlights that limited housing supply is the main contributor to this situation.
Low Inventory Persists throughout the Summer
Jeff Tucker, senior economist at Zillow, further observes that inventory levels during this summer have been incredibly low. The scarcity of available homes leads to high competition among buyers, with approximately 4 out of 10 homes currently being sold above the list price. This contrasts significantly with 2018 when less than one-third of home sales exceeded the list price.
Areas Experiencing the Biggest Decline in Inventory
Realtor.com’s data reveals that the sharpest inventory decline in July occurred in Stockton, Calif. with a substantial decrease of 56%. The Bay Area followed closely behind with a decrease of 52%, while the San Diego-Chula Vista-Carlsbad metro area experienced a decline of 46%. In Stockton, the median price for homes is $449,000. The Bay Area boasts a median price of $1.5 million, and San Diego’s median price is nearly $500,000.
Furthermore, Oshkosh-Neenah, Wis., witnessed a 29% decline in inventory, while Lancaster, Penn., experienced a decrease of 26%. The median price for a home in Oshkosh, Wis. amounts to $260,000, whereas in Lancaster, it reaches $320,000.
It is evident that the limited housing supply continues to affect first-time buyers across the country, exacerbating competition and driving prices higher.
The Impact of the Pandemic on Housing Inventory
The return to the office after the pandemic has significantly affected the availability of properties for sale. Specific areas in the Bronx and Brooklyn, such as Williamsburg (zip code 11206), have experienced a considerable decline in housing inventory. Active listings in Williamsburg have dropped by almost 39% since last July. Brownsville in Brooklyn followed, with a 10% decrease in inventory, and Bathgate in the Bronx ranked third.
Where is Housing Inventory Improving?
According to Realtor.com, the Sun Belt has seen a notable increase in the number of homes available for sale in July. The Crestview-Fort Walton Beach-Destin metro area in Florida had the highest housing inventory, with a 21% year-over-year growth in listings. Punta Gorda (up 72%) and Panama City (up 15%) also experienced significant growth.
Several other areas witnessed a substantial surge in listings. Killeen-Temple in Texas had the highest growth in home listings over the past year (79%), followed by the Houma-Thibodaux, La. metro area (up 76%), and Punta Gorda, Fla. (up 72%).
Even further from major metropolitan areas, listing growth remains robust. Active listings expanded by 26% in Water Mill, Long Island, N.Y., 13% in Alpine, Bergen County, N.J., and 6.3% in Westhampton Beach in Long Island.
Supply in the West: A Different Story
In the western region of the country, the housing inventory situation is unfolding differently. Los Angeles, a prominent center for entertainment and the arts, has experienced slow growth in home inventory. Century City saw a modest increase of just 2.1% in July, according to data from Realtor.com.
On the other hand, Malibu and Newport Beach observed growth in listings. Newport Beach saw a significant surge of 125% in July, while Malibu experienced a 45% increase.
In comparison, housing inventory is at its lowest in the following California metro areas: Bellflower, where home listings fell by 48% in July; Westminster, with a decline of 65% in listings; and South Gate, where listings dropped by 14%.
