By Steve Cook
Realtor.com® listing data for February suggest buyers are getting an early start to the 2013 home-buying season, despite the bad weather in many parts of the country and inventories that are still at record lows. Sellers are finally responding to the positive market by replenishing depleted inventories.
On a national basis, the average time homes spend for sale is declining even as inventories of homes listed for sale are growing. The average home now spends less than 100 days on realtor.com®. That’s the fastest average time for a listing to spend in our inventory since October. The average age of inventory fell nearly ten percent from January to February, a sign that homes are selling faster before the spring season begins in earnest-or that recent listings are a greater share of listings inventories.
While the median age of the inventory is highly seasonal, the year-over-year age of inventory fell to 11.71 percent below the median age one year ago (February 2011). This decline is consistent with a gradual, but persistent downward trend that has been occurring for the past two years.
The decline in the median time listings are on realtor.com® is widespread. Age of inventory fell in all but one of the 146 markets realtor.com® tracks, even in Midwestern and Northeastern markets that experienced heavy snowstorms and cold temperatures in February.
The realtor.com® data showing an early surge of demand confirms reports from REALTORS® that foot traffic was higher than normal in January. Both signs suggest that sales this spring are likely to be even stronger than they were last year, when early spring sales were atypically strong.
The national median list price also reversed its recent downward trend, rising by 1.55 percent over the month and 1.01 percent on an annual basis. And while list prices continue to decline in many smaller industrialized markets in the Midwest and North East, the number of markets experiencing a decline is beginning to turn around, spelling more good news for the housing market and the US economy at large.
The nationwide median list price rose to $189,900 in February. While list prices remain about 2.6 percent below their peak during the 2012 home buying season ($195,000)–and 24 percent below their level in January 2007 ($249,900)–if list prices continue to pick up speed as they did last year in the spring, 2013 could prove to be another good year for the housing market.
The total U.S. for-sale inventory remained at near-record lows in February, with 1,494,218 units for sale. While the inventory was slightly up on a monthly basis, reflecting the beginning of the home buying season, it was down by 15.97 percent compared to a year ago and is less than half its peak of 3.1 million units in September 2007. Record low inventories, combined with list prices that are once again on the rise, are likely to set the stage for continued gains in housing values in the upcoming year.
The median age of inventory of for-sale listings fell to 98 days in February, 11.71 percent below the median age one year ago (February 2011). While the median age of the inventory is highly seasonal, the year-over-year decline is consistent with a gradual, but persistent downward trend that has been occurring for the past two years.
The strength of housing markets varied greatly by region, with markets in California registering the highest increases in listing prices coupled with the largest inventory declines. Phoenix, Seattle and Denver were also among the top performers. However, although their numbers have begun to decline, many smaller industrialized markets in the Midwest and the Northeast continue to register year-over-year list price declines, as did Philadelphia, Chicago and New York City.
On a year-over-year basis, the for-sale inventory declined in all but five of the 146 markets tracked by Realtor.com, while list prices increased in 78 markets, held steady in 29 markets and declined in 39 markets. While the number of markets experiencing year-over-year list price declines had been increasing for the past 6 months, this pattern appears to be turning around. Last month, for example, list prices increased in 71 markets on a year-over-year basis and declined in 50.
On a year-over-year basis, February median list prices were up by 1 percent or more in 78 of 146 MSAs, and up by 5 percent or more in 51 MSAs. Median list prices were down by 1 percent or more in 39 markets, while 11 experienced a decline of more than 5 percent. The remaining 29 markets have not experienced significant changes in their median list price compared to a year ago.
During the past seven months, the number of markets experiencing year-over-year price declines has steadily increased, while the number experiencing list price increases has steadily declined. However, this pattern appears to be turning around, with the number of markets registering a year-over-year list price decline in February (39) significantly below the number of declines observed in last month (50). Nevertheless, year-over-year list price trends are not as strong as they were one year ago.
Markets experiencing the greatest list price declines generally have not experienced large reductions in their for-sale inventories. Excluding Chicago, for-sale inventories in the markets with the greatest list price declines fell by an average of 8 percent, roughly half the national average. However, for-sale inventories in both Chicago and New York are down by about 22 percent.
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