The nation’s low mortgage rates were the main driver of homebuyer demand throughout 2019, spurring an uptick in home sales across the country. But as more homeowners flocked to the market, housing inventory, which has been on a steady decline since the housing crisis, fell in housing markets from the east to the west.
In November alone, Realtor.com indicates housing supply dropped by 9.5% year over year, falling the most in the starter-home segment where homes priced below $200,000 decreased by a whopping 16.5%.
George Ratiu, Realtor.com’s senior economist, said this decline has disproportionally impacted the nation’s Millennial homebuyers who tend to fall in the first-time homebuyer segment.
“As Millennials – the largest cohort of buyers in U.S. history – embrace homeownership and take advantage of this year’s unexpectedly low mortgage rates, demand is outstripping supply, causing inventory to vanish,” Ratiu said. “The housing shortage is felt acutely at the entry-level of the market, where most Millennials are looking to break into the market for their first home.”
According to Realtor.com’s data, November’s overall inventory decrease amounted to a loss of 131,000 listings nationwide, compared to the same time period in 2018. In the nation’s 50 largest housing markets, inventory retreated by 8.8% year-over-year.
“Inventory decreases were the norm across all price points in November,” Realtor.com writes. “Mid-tier inventory priced between $200,000 and $750,000 also decreased by 7.4% year-over-year compared to October’s year-over-year drop of 4.3%, while high-end inventory priced above $1 million decreased by 1.7% year-over-year, compared to October’s year-over-year increase of 1.3%.”
As the volume of new listings hitting the market in November decreased by 7.7% since last year, the company warns finding an affordable home will remain one of the largest obstacles to homeownership in 2020.
The good news is, Realtor.com determined the national median home price has yet to adjust to recent inventory declines after a multi-month run-up in inventory earlier this year.
During November, the median U.S. listing price grew by only 3.6% year-over-year, to $309,000, which is less than the 4.3% year-over-year increase seen last month.
The bad news is, of the 50 largest housing markets, 43 saw year-over-year gains in median listing prices. Los Angeles led the charge with a 16.6% increase, followed by Rochester, New York at 12.8%; and Birmingham, Alabama at 12.3%, according to the company.