Lack of Inventory Continues to Dog U.S. and New York State Housing Markets

John Jordan | March 2018

WASHINGTON—Chief officials with the National Association of Realtors and the New York State Association of Realtors continue to point to low inventory levels as a continuing headwind for the residential sales market.

The National Association of Realtors released home sales statistics for the month of February that showed a 3% sales volume increase nationally, however, sales last month in the Northeast fell 12% from January 2018 and were more than 7% below sales posted in February 2017.

The New York State Association of Realtors describes the home sales market as strong, but notes that February 2018 statewide sales totaled 7,328 units, a decrease of 6.2% from the February 2017 total of 7,813 sales.

Total U.S. existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 3.0% to a seasonally adjusted annual rate of 5.54 million in February from 5.38 million in January. After last month’s increase, sales were 1.1% above a year ago.

NAR Chief Economist Lawrence Yun says sales were uneven across the country in February, but did increase nicely overall. “A big jump in existing sales in the South and West last month helped the housing market recover from a two-month sales slump. The very healthy U.S. economy and labor market are creating a sizeable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices—especially in the West—shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”

“The unseasonably cold weather to start the year muted pending sales in the Northeast and Midwest in January and ultimately led to their sales retreat last month,” Yun added. “Looking ahead, several markets in the Northeast will likely see even more temporary disruptions from the large winter storms that have occurred in March.”

February existing-home sales in the Northeast fell 12.3% to an annual rate of 640,000, and were 7.2% below a year ago. The median price in the Northeast was $258,900, which was 3.6% above February 2017.

Editor’s Note: The NYSAR sales statistics do not include sales from the Hudson Gateway Association of Realtors market area of Westchester, Rockland, Orange and Putnam counties, as well as the counties that make up the Greater Capital Association of Realtors. HGAR will be releasing its sales statistics for the first quarter of 2018 in early April.

Several HGAR Broker-Owners have told Real Estate In-Depth that the continued low level of inventory is impacting home sales in the region.

NYSAR reports the February 2018 statewide median sales price was $260,000, an increase of 8.8% from the February 2017 median of $239,000.

The months supply of homes for sale dropped 10.7% at the end of February to 5.0 months supply. It was at 5.6 months at the end of February 2017. A 6.0-month to 6.5-month supply is considered to be a balanced market. Inventory stood at 57,082, a decrease of 9.5% compared to February 2017.

“The ongoing decline in homes listed for sale created a headwind for New York State home sales during February,” says NYSAR CEO Duncan R. MacKenzie. “However, buyer demand remained high, driving sales to the third highest total for the month. Buyer competition in this low-inventory market continues to spur sales price growth.”

He continued, “As we move closer to the typically busier spring and summer months, housing market sales growth will be largely dependent on an influx of newly listed homes and residential construction gains to meet demand.”

Some key data points from the NAR February housing market report include:

Single-family and Condo/Co-op Sales

Single-family home sales rose 4.2% to a seasonally adjusted annual rate of 4.96 million in February from 4.76 million in January, and were 1.8% above the 4.87 million pace a year ago. The median existing single-family home price was $243,400 in February, up 5.9% from February 2017.

Existing condominium and co-op sales declined 6.5% to a seasonally adjusted annual rate of 580,000 units in February, and were 4.9% below a year ago. The median existing condo price was $227,300 in February, which was 5.7% above a year ago.

Regional Breakdown

In the Midwest, existing-home sales dipped 2.4% to an annual rate of 1.22 million in February (unchanged from a year ago). The median price in the Midwest was $179,400, up 4.5% from a year ago.

Existing-home sales in the South jumped 6.6% to an annual rate of 2.41 million in February, and were 3.4% above a year ago. The median price in the South was $215,700, up 5.4% from a year ago.

Existing-home sales in the West surged 11.4% to an annual rate of 1.27 million in February, and were 2.4% above a year ago. The median price in the West was $370,600, up 9.6% from February 2017.

John Jordan
Editor, Real Estate In-Depth