Americans eager to buy a home this spring, beware: It’s slim pickings out there.
The number of U.S. homes on the market is at near-historic lows, which could dim would-be buyers’ prospects for finding a house or condo and fuel competition for the most affordable properties, economists say.
As of the end of February, just as the spring homebuying season got under way, some 980,000 homes were on the market nationally, according to the National Association of Realtors.
That’s an increase of 15.3% from February last year, when the number of homes for sale sank to an all-time low.
February’s tally of homes for sale translates into a 2.6-month supply at the current sales pace, according to NAR. In a more balanced market between buyers and sellers, there is a 5- to 6-month supply.
While homebuyers will have more properties to choose from now than last spring, the low supply and sharply higher mortgage rates set the stage for a higher overall price tag for homeownership.
“Buyers are facing a tough market, both in terms of inventory availability and in terms of how that matches up to affordability,” said Hannah Jones, an economic data analyst at Realtor.com.
A big reason there are more homes for sale than a year ago: Properties are taking, on average, nearly twice as long to sell. New listings, meanwhile, were down about 16% in February from a year earlier, according to Realtor.com data.
Homebuyers have had to contend with a shrinking pool of homes for sale for much of the last decade, partly due to underbuilding of new homes since the mid-2000s housing crash and years of ultra-low mortgage rates, which give homeowners less incentive to sell after years of soaring home prices.
“Homeowners aren’t giving up their current house and low monthly payments to join a tight, expensive market,” said Skylar Olsen, chief economist for Zillow.
The last year that the monthly tally of homes on the market averaged more than 2 million was 2015, according to NAR data. That’s steadily declined, reaching 995,833 last year.
Despite the thin inventory of home listings, sales of previously occupied U.S. homes surged 14.5% last month as homebuyers seized on a modest drop in mortgage rates. Sales were down 22.6% from a year earlier, when mortgage rates were, on average, more than 2 percentage points lower.
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