With Low Inventory, Homes Selling Quickly At Record Paces

If you’re shopping on the real estate market, it’s not the best time to have a picky attitude. According to Realtor.com, there were just 408,922 houses on the market last month, a record-low for a country that currently has a population of 332 million people.

The average amount of homes for sale on a typical January day saw 28.4% decline over last year and 60.4% drop compared to 2020. This total continues December’s 26.8% decline, and marks the fourth-straight month where the decline compared to the year prior has dropped.

The low amount also means homes are going fast. Realtor.com noted that houses were on the market for just 61 days in January, the fastest-pace since the real estate website started tracking that number in 2016. That’s down 10 days from last year, and down 24 days from January 2020.

In the 50 largest metros, an average home spent 52 days on the market, while homes spent seven days less on average when compared to January 2021. Homes also spent -29 days less on the market than the typical time from January 2017 to 2020.

Among the metros, the time a property spent on the market decreased the most in the South (-10 days). Destinations like Miami (-29 days), Orlando (-24 days), and Raleigh (-17 days) saw the biggest drops.

The West followed it up with -8 days, while the Midwest and Northeast came in at -5 and -4 days, respectively. Not all metro markets saw decreased time, however. Hartford, Minneapolis, Richmond, and Washington D.C. all had increased time houses spent for sale, although Hartford separated itself from the competition at +10 days, eight more than the Minneapolis.

While inventory declined in all 50 metros — Hartford having the worst of it with a -61.7% year-over-year drop — four saw new increased year-over-year-growth in listed homes, which include Cleveland (+7.6%), Orlando (+2.3%), Indianapolis (+1.6%), and Houston (+0.9%).

Housing prices also continue to rise, with active listing prices in the largest metros sitting at 6.1% higher compared to January 2021. Las Vegas saw the biggest year-over-year median price growth with +35.3% (and a median listing price of $460,000) with Tampa and Austin following it up around +28%.

Speaking to CNBC, Realtor.com chief economist Danielle Hale gave a rundown of why the market inventory is severely lacking in quantity. “Factors like omicron uncertainties could be causing sellers to hesitate even when they know housing conditions are favorable,” Hale explained.

“Another key barrier is the inventory ‘chicken-and-egg’ dilemma that may vex sellers who are also buying: Do you list now when home shoppers are hungry for more options, or do you wait for more inventory to hit the market in the spring?”

Supply and workers shortages, along with higher costs of materials, have also contributed to the lack of housing options, which has been an ongoing issue since the beginning of the pandemic in March 2020. According to GoBankingRates, an NAHB report found aggregate cost of residential construction materials has risen 19% since December 2020.