New Housing Supply Appears to Be on the Way For Desperate Buyers

It is little secret that the housing market is extremely tight. The good news, for buyers at least, is that a new survey suggests that more homes could be headed for the market. 

The bad news? These new units will likely not nudge the needle that much. The latest realtor.com data from the week of April 17 shows that the national inventory of homes was 53% below the same time in 2020. Compared with the 2017 to 2019 period, March 2021 saw about 117,000 fewer new listings.

The net effect of this diminished inventory is bidding wars. Median listing prices have jumped 17.2% year-over-year with 36 consecutive weeks of double-digit gains. These price increases have hurt first-time buyers, with a recent realtor.com survey finding that over 40% of them spent over a year shopping for a home.

A new report from Redfin shows similar trends, with the median home-sale price increasing 18% year over year to $344,625, which is an all-time high. Asking prices also hit an all-time of $356,175. Forty-five percent of homes sold for more than their list price—another all-time high.

A recent study from realtor.com and HarrisX found that help is on the way for both trade-up and first-time buyers. Ten percent of homeowners in the US plan to sell within the next 12 months, which is 25% more than the share of homes that come to market in a typical year, according to realtor.com. In addition, 16% of homeowners are likely to list their homes in the next two to three years.

The survey found that 76% of potential sellers have taken active steps to sell their home, such as making repairs, cleaning and redecorating, researching home values and contacting real estate agents.

The homes that come to market could help meet some of the demand of entry-level and move-up buyers. Roughly 60% of potential sellers say they plan to sell homes at prices below $350,000—the national median price. Also, 28% plan to sell homes in the $500,000 to $750,000 range, which fit in the move-up category.

More than 60% of potential sellers say they planned to list within the next six months. Nine percent of those sellers had homes already on the market. Also, 10 percent plan to list in the next 30 days.

The current situation, though, shows how far this new supply must stretch to alleviate conditions. 

When homes hit the market, they are typically available for a median of 21 days, which was the shortest time since 2012 and 16 days fewer than the same period in 2020.

Redfin uses the average sale-to-list price ratio to measure how close homes sell to their asking prices. That metric increased 2.3 percentage points year-over-year to an all-time high of 101.0%, which means the average home sold for 1% more than its asking price.

Fifty-eight percent of homes that went under contract had an accepted offer within the first two weeks on the market, while 46% of homes had an accepted offer within one week of hitting the market. Both of these numbers were all-time highs.

“Without more homeowners listing, buyers are scrambling to compete for the limited number of homes on the market, which continues to drive prices up to new heights,” Redfin Chief Economist Daryl Fairweather said in prepared remarks.