Photo: Paul Sableman/Flickr
US housing inventory grew for the third straight month in November, but the overall housing market still has a long way to go before it sees meaningful impact, says a new report by the listing site Zillow.
“After years of intense inventory shortages and cutthroat competition, any gains in inventory should be embraced by homebuyers,” said Aaron Terrazas, Zillow senior economist, in a statement.
At the national level, inventory grew by 0.4 percent year-over-year, following nearly four years of annual declines.
Overall, inventory levels are still well below historic norms, and the small increases seen over the last three months have yet to significantly reverse those deficits. Still, at the very least, inventory stopped falling as fast it did in 2017 during this period, when it dropped 9.1 percent on annual basis.
“Unfortunately, the small recent gains are not nearly enough to fully erase the existing deficit, nor are they evenly distributed – there are roughly twice as many homes available for sale in the higher reaches of the market than there are at the lower, more competitive end,” says Terrazas.
Terrazas is quick to point out that inventory hasn’t quite entered the recovery phase just yet. Rather, inventory levels are no longer in a state of free fall. And while inventory is in a slightly improved condition, a full-on recovery remains highly improbable.
“It’s looking increasingly unlikely that we’ll see a meaningful upward surge in inventory any time soon,” says Terrazas.
Since the housing bust, the pace of new construction has slowed significantly. Terrazas says that new building activity has been “sluggish, at best.” The inventory shortage has been exacerbated by hesitant-to-sell existing homeowners who fear not being able to find a home they like and can afford in the current market.
Plus, rising interest rates mean that many existing homeowners will end up paying more per month if they move.
Terrazas calls the modest gains “a step in the right direction” and is quick to add that “there’s a long march to go.”
Meanwhile, the typical home was worth $222,800 in November, up 7.7 percent year-over-year.
Las Vegas and Atlanta home prices grew the most out of the 35 metros analyzed since last year, with the median home value in each metro increasing by over 13 percent — 13.9 percent and 13.3 percent, respectively.
But while the Atlanta market has recovered from the bust and surpassed its bubble peak value in mid-2017, Las Vegas home values are still almost 13 percent below housing bubble peaks.