Fewer homes were on the market in February compared to a year prior, and home prices are rising as inventory continues to tighten, according to realtor.com®’s February Housing Trends Report. That has prompted economists to predict a particularly competitive spring homebuying season.
National housing inventory dropped 15.3% year over year in February, the largest annual decline since realtor.com® began tracking inventory data. Twenty-five of the nation’s 50 largest metros saw their inventory decline by 20% or more. The largest inventory drops were recorded in Phoenix, San Diego, and San Jose, Calif., where decreases exceeded 36% year over year, realtor.com® reports. The inventory crunch pushed the median U.S. listing price up 3.9% to $310,000.
“The Fed’s decision to cut rates by 50 basis points earlier this week in reaction to concerns over the spread of COVID-19 [also called the coronavirus] is good for home buyers, but only if they can find a home to purchase,” says Danielle Hale, realtor.com®’s chief economist. “Finding a home remains the chief challenge in today’s inventory-starved market. Given the still-decreasing number of homes for sale in many markets, if a listed home is priced well, expect it to sell quickly this year. Construction of new homes will need to jump into overdrive in order to bring the nation’s supply and demand for housing back toward equilibrium.”
Further, Hale also says it remains unclear just how big of an impact the spread of the coronavirus could have on consumer spending, at least in the short term.
The latest housing numbers don’t take into account the mounting fears of COVID-19 outbreaks in the U.S. over the last week. However, last month, the housing market was robust. Home prices in 46 of the 50 largest markets in February were, on average, 6.5% higher than a year earlier. Philadelphia saw the largest home price increase in the nation, up 17% annually to $295,000.