Between April and June, U.S. home inventory tumbled 8.9% nationally year-over-year, and has now fallen for a record nine consecutive quarters, according to the Trulia® Inventory and Price Watch released Wednesday.
Inventory today is 20% lower than it was five years ago with the current number of starter and trade-up homes on the market decreasing 15.6% and 13.1% respectively, during the past year. Meanwhile inventory of premium homes has fallen by just 3.9%.
Falling inventory has also pushed affordability of homes across all segments to new post-recession lows. A typical starter-home buyer would need to dedicate 39.1% of their monthly income to buy a starter home – a 3.1-point increase from last year – while trade-up home buyers need 26.0% more than this time last year. Premium home buyers fared the best as they need to shell out 14.3% more of their income.
Across metros, falling inventory strongly correlates with how long homes stay on the market. On average, the more a market’s housing inventory has fallen over the past five years the faster homes come off the market. In 2012, 57% of homes nationally were still on the market after two months, while today that number has fallen to 47%.
Housing markets with the largest decreases in inventory during this time have also seen significantly fewer homes for sale after two months. Hurried home buyers this spring can mostly be found in the West, except for Columbus, Ohio, while the slowest moving markets are predominately in the South and Northeast.
| America’s Fastest Moving Markets | ||
| U.S. Metro | % of Homes on Market after Two Months (April 1 – June 1, 2017) | 5-Year % Change in Housing Inventory, 2012-2017 |
| San Jose, CA | 20.0% | -44.2% |
| Oakland, CA | 20.3% | -30.5% |
| Seattle, WA | 21.9% | -45.6% |
| San Francisco, CA | 23.7% | -31.7% |
| Salt Lake City, UT | 26.0% | -61.2% |
| Tacoma, WA | 27.7% | -42.2% |
| San Diego, CA | 28.2% | -55.8% |
| Colorado Springs, CO | 31.6% | -54.8% |
| Columbus, OH | 32.8% | -56.2% |
| Denver, CO | 33.6% | -43.2% |
“Markets that have witnessed larger decreases in inventory have experienced larger declines in the share of homes still sitting on the market after two months,” said Ralph McLaughlin, Trulia’s chief economist. “With these declines, falling inventory has also pushed affordability of homes across all segments to new post-recession lows.”
He continued, “As inventory continues shrink, the few homes that are available are flying off the market within a couple of months. In the tightest markets in California, only 1 in 4 homes are still on the market after two months. Clearly, this spring is not bringing the inventory relief buyers so desperately need. In today’s frenzied market, buyers must be prepared to (1) move fast, (2) be flexible with sellers’ timelines, and (3) make multiple offers.”
