From the WSJ:
The National Association of Realtors said on Thursday what home buyers in many parts of the United States have known for months: it’s becoming a seller’s market.
The number of homes listed for sale in January fell by 4.9%, leaving 1.74 million properties on the market. That’s the lowest since December of 1999, when there were 1.71 million homes on the market. By contrast, there were 2.91 million homes on the market two years ago at this time.
After adjusting for seasonal factors, home sales rose by just 0.4% in January, to an annual rate of 4.92 million units. Still, that’s up from 9.1% one year ago.
The upshot is that there’s a growing pool of buyers chasing a shrinking supply of homes. If the trend holds, prices will keep going up. At the current pace of sales, it would take just 4.2 months to sell the current supply of homes available for sale, down from a 6.2 months’ supply one year ago.
While inventories typically increase in the spring, the Realtors’ group has expressed growing concerns that sales volumes are being held back by the lack of choice. This is good news for homeowners who have watched home prices drop over the last six years, but it’s bad news for buyers—and for anyone that makes their living selling real estate.
Sales of previously owned homes increased in January and an index of leading indicators climbed for a second month as the rebound in housing helped to broaden the U.S. expansion.
Purchases of existing houses rose 0.4 percent to a 4.92 million annual rate, figures from the National Association of Realtors showed today in Washington.
Improving home sales combined with dwindling inventory spurred the biggest advance in property values since 2005, helping mend household finances. The gain in housing, the industry that was at the center of the financial crisis, may help consumers overcome an increase in the payroll tax and rising gasoline prices that pose a risk to spending.
“The economy has legs,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, a unit of the largest U.S. mortgage lender. “A lot of people are much more confident. Housing has picked up, and I think it’s sustainable.”
The number of previously owned homes on the market fell 4.9 percent to 1.74 million, the fewest since December 1999, today’s report from the Realtors’ group showed. At the current sales pace, it would take 4.2 months to sell those houses, the fewest since April 2005.
“Inventory has increasingly become the story of the housing market,” Lawrence Yun, NAR chief economist, said in a news conference as the figures were released. “We do expect some relief in inventories as the spring season comes around.” He also said that “only the homebuilders can truly relieve the inventory” shortage.