Homebuyers could have more negotiating power this spring, as inventory surges. At least three new reports show the supply of homes for sale is the best it’s been in about ten years. The drop comes after several months of slow sales, but the data shows that demand is strong so prices may not recede that much.
It may be too soon to call it a buyers’ market, but Zillow, Redfin, and Re/Max all agree that the market is tipping toward buyers.
Zillow: “Buyers Have More Selection”
Taking a look at the Zillow report, the company says there were about 1.6 million U.S. homes listed for sale on Zillow last month. That’s 1.2% more than last year, and it’s the first time we’ve seen a year-over-year gain on Zillow since 2014.
Zillow data shows that inventory fell for 44 months starting in January 2015. The reversal began last September. Inventory has been growing since then. It’s still down more than 20% from a high in mid-2014, but inventory is climbing.
Zillow says homebuyers aren’t out of the woods yet. It says this sudden upswing in inventory is not doing much to keep prices from moving higher, but it says there’s a glimmer of light on the horizon for buyers. The median home value in January was $225,300. That’s up 7.5% from a year earlier.
The report also includes rent data. It shows that rents have risen 2.1% in the past year to a median of $1,469. Rents rose the most in Orlando. They were up 7.4% there. (1)
Redfin: “Things are Looking Good for Buyers”
Redfin is also reporting a 44-month high for inventory, but pegged the increase from last year at 6.3%, which is much more than Zillow. It used data from the 81 markets that it tracks. 54 of them had more homes on the market than they did a year ago.
Redfin shows a median price of $285,900 which is also much higher than Zillow. That represents a 2.9% year-over-year increase. It didn’t provide data on rent. (2)
Re/Max: Record Increase for Inventory
Re/Max also issued a report saying the January increase in inventory is the largest in at least 10 years. It says that year-over-year home sales dropped 11% across the 54 metros that it tracks. That contributed to a 6.4% increase in inventory during that same time period which is about the same as the Redfin report.
Re/Max CEO Adam Contos says, “The winter chill extended to the housing market in January, as home sales remained cool. The good news is that inventory levels in January continued to rise on a year-over-year basis, providing incremental improvement in what’s been a multi-year shortage of for-sale homes. This is a positive for homebuyers, as the market continues to swing their way.”
The median sales price for Re/Max is $234,000. That’s up 4.6% from a year earlier. Contos says that demand remains stable indicating that the housing market is relatively healthy. (3)
Inventory vs. Affordability
These reports show that buyers are gaining an edge, but not enough to drive prices down. Although a few markets are showing price declines, prices in most markets are still going up — just not as fast.
The National Association of Realtors says the median existing-home price was up 2.8% in January. That’s the 83rd month that prices have risen, but NAR says home price growth is the lowest it’s been since February 2012.
Signs of a Buyer’s Market
So how do you know when the market has actually turned toward buyers?
The Balance offered a nice checklist.
- The market experiences a big increase in inventory. We’re not quite there yet.
- There’s more than six months of inventory on the market. We’re not there yet either.
- Listing prices are lower than recent sales. We’re mainly seeing that in the high end.
- There are fewer buyers, which we experienced when interest rates rose, but they are down again.
- Median sale prices are going down. They are still rising, but more slowly.
- It takes longer for sales to close. That hasn’t changed much although Re/Max says the average number of days on the market was up four days in January of this year compared with January of last year.
Redfin CEO Glenn Kelman says the market is turning a corner from sellers to buyers, and he’s optimistic that more homes for sale will help get the market moving, but he doesn’t expect big changes in terms of home prices. He says, “We expect the supply of homes for sale to increase, giving buyers more homes to buy, but not so many that prices drop broadly.”
Of course, we’re talking about how the market is reacting on average, nationally. Individual markets will vary, with some offering greater rewards than others.
(1) Zillow Report
(2) Redfin Report
(3) Re/Max Report