Booming demand for U.S. homes drove the number of properties for sale to new lows in December, according to a report on Thursday.
Nationwide, the number of homes for sale fell below 700,000 in December, the lowest in recent history, according to realtor.com. A flurry of demand that has vastly outpaced new listings to the market has steadily eroded U.S. housing inventory since the summer and caused home prices to surge.
A housing shortage has been building for years, said Danielle Hale, realtor.com’s chief economist—especially at more affordable price points.
“But in December the combination of the holiday inventory slowdown and the pandemic buying trend caused it to dip to its lowest level in history,” Ms. Hale said in the report. She forecasted U.S. housing supply would remain low for at least a few more months as a winter surge in Covid-19 cases discourages sellers from entering the market.
Buyers are facing an acute shortage of homes to choose from in cities like Austin, Texas; Denver; and Providence, Rhode Island. These and other areas like Dallas and Charlotte, North Carolina, had less than half the number of homes for sale as they did in December 2019.
Stiff competition and opportunistic sellers—banking on robust demand—have caused home prices to surge. The median home price in December was $340,000, down slightly from the summer high of $350,000 but still 13.4% higher than December 2019.
Some areas have seen even more dramatic price increases. Runaway growth in Austin has pushed the median sale price up 20% year over year. Riverside-San Bernardino, California, has seen a 17% increase in the median sales price as home buyers flock to smaller cities.
There were signs, however, that the inventory situation was improving in some parts of the country—notably in the San Francisco Bay Area. New listings in December doubled from the year prior in San Jose, California, the seat of Silicon Valley, and in San Francisco, according to realtor.com.
“We eventually expect to see improvements in the supply of homes for sale, especially in the second half of the year,” Ms. Hale said. “Until then, finding a home will continue to be a top challenge for buyers across all price ranges.”
Mansion Global is owned by Dow Jones. Both Dow Jones and realtor.com are owned by News Corp.
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