The number of homes for sale fell to a 13-year low in January, leaving would-be buyers chasing a shrinking supply of homes just before the spring selling season.
The number of existing homes listed for sale in January totaled 1.74 million, down 4.9% from December and at the lowest level since December 1999, accordingly to the National Association of Realtors.
Meanwhile, sales of previously owned homes were running at a seasonally adjusted annual rate of 4.92 million units in January, up 0.4% from December and 9.1% from January a year earlier. At the current pace of sales, it would take just 4.2 months to sell the existing supply of homes available.
Buyer interest is off to a strong start and the combination of rising demand and falling supply leave home shoppers with few choices to work with in the spring which traditionally the busiest season of the year.
“Sellers are calling the shots right now,” said Carolyn Williams, a real-estate agent in Dana Point, Calif. “What’s out there is gobbled up with anywhere from five to 25 offers.”
More competition is good for homeowners, who are seeing prices rise after six straight years of decline. Thursday’s report said the median price of an existing home stood at $173,600 in January, up 12.3% from a year earlier. Fewer options in the existing-home market also could spur traffic to newly built residences, benefiting home builders.
Homes are selling faster. The median number of days on the market for homes in January was 71, meaning half of all homes sold within that time, down from 73 days in December and 99 days one year ago.
Distressed sales—including foreclosures and short sales, in which banks allow borrowers to sell at a loss—accounted for 23% of sales in January, down from 35% a year earlier but still high by historical standards.
The Realtors’ group says it expects distressed sales to fall to around 15% of the market by year-end, in part because there are fewer foreclosures.
A separate report Thursday showed that the number of American households behind on mortgage payments fell to the lowest level in four years at the end of 2012.
The number of loans in foreclosure also fell by the largest margin in the 34-year history of the survey, conducted by the Mortgage Bankers Association.
Delinquencies have been falling for three years, as the economy and job growth have improved. At the end of 2012 about 10.8% of mortgage loans on one-to-four-unit homes were either in foreclosure or at least 30 days past due. That was down from a peak of 14.7% in early 2010.
Many of those are a legacy of the recession and housing bust: Thursday’s report showed that the level of loans that were newly delinquent—those 30 days late on payments—fell to their lowest level in 5½ years during the fourth quarter.
“We’re well on our way back to what is perhaps a new normal,” said Jay Brinkmann, the MBA’s chief economist.
Some housing analysts have warned of a second wave of foreclosures to hit markets, dragging down prices. But so far that hasn’t happened, and the prospect looks increasingly remote for much of the U.S. The share of loans in foreclosure, though still above precrisis levels, was 3.7% in the fourth quarter, down from 4.4% a year earlier.
The drop in foreclosure rates has been more pronounced in states like Arizona and California where banks don’t have to get foreclosure approval from a judge.
In so-called judicial states such as Florida and New Jersey, foreclosure rates have stayed much higher, leaving greater potential for “shadow” inventory that could hit the market down the road.
Source: Wall Street Journal