Number of US Homes for Sale Plunges to Lowest Level Since 2012

Number of US Homes for Sale Plunges to Lowest Level Since 2012
A "For Sale" sign is posted in front of a home in San Anselmo, Calif., on March 22, 2023. Justin Sullivan/Getty Images
Naveen Athrappully
Updated:

Fewer homes were available for sale in the United States in May than in any month since real estate brokerage Redfin began keeping records in 2012.

The number of homes for sale declined by 7.1 percent year-over-year in May 2023 on a seasonally adjusted basis to 1.4 million units, according to a June 21 Redfin statement; it’s the first annual decline since April 2022.

The sales numbers for May are 38.6 percent lower than the same month in 2019, before the pandemic hit the housing market. Redfin blames the shortage of homes on persistently high mortgage rates.

“Nearly every homeowner with a mortgage has an interest rate below 6 percent, meaning many are opting to stay put because selling and buying a new home would mean taking on a higher monthly mortgage payment.”

New listings of homes for sale fell by 25.2 percent in May from a year ago, to the third lowest level on record.

According to a June 22 post by the National Association of Realtors (NAR), the lack of existing homes for sale in the market is forcing buyers to look at other options.

“Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector,” NAR Chief Economist Lawrence Yun pointed out.

Meanwhile, “existing-home sales activity is down sizably due to the current supply being roughly half of the level of 2019.”

High Home Prices

The housing shortage is keeping home prices elevated. In May, the median U.S. home sales price was $419,103, only slightly lower than the record high of $432,311 hit a year earlier.

Redfin Chief Economist Daryl Fairweather says it’s still too early to say whether price declines have “bottomed out,” as he believes they could continue to fall.

“Prices may have room to fall because mortgage rates could still rise. The Federal Reserve just signaled that it is likely to continue raising interest rates this year,” he said.

“That could further hamper homebuyer demand and cause home prices to fall in the near term, though the drops would be minimal. We’re unlikely to see double-digit price declines like we did during the 2008 housing crisis.”

Demand is edging up amid a shortage of homes as evidenced by rising mortgage loan applications. The Mortgage Bankers Association’s Market Composite Index, a measure of mortgage loan application volume, rose by 0.5 percent for the week ending June 16 from a week earlier.
Yun said that mortgage rates, which continue to remain elevated, will “heavily influence the direction of home sales.”

According to data from Freddie Mac, for the week ending June 22, the 30-year fixed-rate mortgage rate averaged 6.67 percent, a level that it has been hovering around for a few weeks.

“Relatively steady rates have led to several consecutive months of consistent home sales,” Yun said.

Affordability Issues

Though mortgage applications are rising, affordability remains a major challenge for many prospective homebuyers.
Data from NAR’s Housing Affordability Index (pdf) show that the median price of an existing single-family home was $393,300 in April 2023, up from the $300,200 average price in 2020.

The qualifying income required to buy a median-priced existing single-family home has jumped from $49,680 in 2020 to $94,656 in April 2023. Meanwhile, mortgage payment as a percentage of income has jumped to 26 percent from 14.7 percent.

According to Fairweather, people who think it’s a bad time to buy a home because of elevated mortgage rates should remember that when the rates eventually fall, numerous buyers will be waiting to enter the market.

“That could lead to more bidding wars since there aren’t enough homes for sale, and heightened competition could push up prices, offsetting some or all of the benefit of lower interest rates.”

Naveen Athrappully
Naveen Athrappully
Author
Naveen Athrappully is a news reporter covering business and world events at The Epoch Times.
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