While the shortage of homes for sale never eased much in the Washington, D.C., region, the pressure on buyers was slightly reduced for much of the country over the past year or so.
But now, according to Realtor.com’s September 2019 Housing Trend report, the national market appears to be heading for a new inventory shortage. The problem of limited listings has always been worse for entry-level houses.
Realtor.com’s latest report shows that increased demand stemming from lower mortgage rates led to a 10% decline in available homes priced under $200,000 in September 2019, compared with September 2018. In addition, the report found that after 18 months of steady increases in the number of homes for sale priced in the mid-market range, defined as homes priced between $200,000 and $750,000, available inventory remained flat.
That price range, which is the largest segment of homes for sale, according to Realtor.com, had zero percent growth in September, compared with the previous year. Realtor.com’s senior economist, George Ratiu, said he thinks the lower inventory figures in September could be an indication of even deeper housing shortages early next year.
Realtor.com found that nearly 60% of homes on the market fall into that mid-market price range, so a decline in listings in that price range will hurt many prospective home buyers. The number of homes priced above $750,000 increased by 4.7% in September, compared with September 2018, but Ratiu said he believes even that price range could start to see declining inventory by February 2020 if the current patterns of listings and rising demand continues.
The median list price in September, according to Realtor.com, was $305,000. Bidding wars, which are another indicator of a tight, competitive housing market, rose slightly in September, according to Redfin real estate brokerage’s bidding war report. Redfin reported that 11% of offers written by Redfin agents on behalf of buyers faced competition in September, up slightly from an eight-year low of 10% in August.
While the shift is not much, Redfin says typically bidding wars decline from August to September, which means an uptick is an unusual indicator. Seasonal home-buying patterns reviewed by Redfin from 2013 through 2018 show the percent of offers that face a bidding war typically fall an average of 15 percentage points from the peak month of March to September.
In 2019, the seasonal decline has been significantly less, dropping by just four percentage points from March to September. Redfin’s report found 28 percent of offers faced a bidding war in September in the most competitive market in the nation, San Francisco, but that is big decline, compared with the 69 percent of offers that faced competition in September 2018.
In Washington, D.C., 10% of offers faced competition this September, compared with 44% last September. Redfin’s chief economist, Daryl Fairweather, said she expects bidding wars to level off for the rest of 2019 rather than decline as they usually do during the final quarter of the year.
Low mortgage rates continue to drive demand, and housing shortages continue to plague many housing markets.
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