People wait to visit a home for sale in Floral Park, Nassau County, New York.
Wang Ying | Xinhua News Agency | Getty Images
The spring real estate market is gearing up to be the leanest and most competitive of all time.
A sharp drop in new offers in part due to bad weather, combined with the already record offer, will make it increasingly difficult for buyers to find the home of their dreams at the ideal price.
There were almost half of the houses for sale at the end of February, compared to the previous year, according to a new calculation by realtor.com. The low supply was exacerbated by a drop in the number of new ads on the market.
“Last month’s record of cold and snowstorms probably caused salespeople to stop, if only temporarily,” said Danielle Hale, chief economist at realtor.com. “However, in the current out-of-stock market, any setback is significant.”
A downturn in sellers has resulted in some 207,000 fewer homes listed for sale in the first two months of 2021 compared to the same period average for the past four years. To catch up, the new ads would have to grow 25% per year in March and April, which is unlikely.
Although the biggest drops in new supply occurred in Oklahoma City and Kansas City, Missouri, the drops were widespread across the country. The only major cities that saw stock gains were San Jose, California, and San Francisco and Denver.
The increasingly restricted supply of houses for sale continues to fuel the fire under house prices. In January, prices rose just over 10% from the previous year, according to CoreLogic. The rise in mortgage rates is now hurting accessibility, but so far it has not affected home prices.
The restricted offer only left sellers more optimistic about their potential earnings. Prices for newly listed homes reached a historic high of $ 347,475 in February, according to Redfin.
Salespeople have many reasons to feel confident. Redfin also found that just over half (55%) of the houses that were hired in February did so in the first two weeks on the market. That share was 44% a year ago.
“In the past few weeks, winter storms have disrupted the housing market and mortgage rates have risen dramatically,” said Daryl Fairweather, chief economist at Redfin. “While pending sales and new ads have suffered a minor blow in recent weeks, gains in home prices show no signs of slowing down.”
While the effects of winter storms are likely to be temporary, higher mortgage rates will further reduce accessibility and may mean less bidding wars as the spring market progresses.