Econintersect: The number of houses for sale is declining. It might seem that would create a mismatch with demand and produce some price increases. However, in most markets prices are flat or declining. In fact, data from the NAHB (National Association of Home Builders) reported in a GEI News article on October 6, indicated that less than 6% of approximately 360 metro housing markets can be classified as “improving”.According to an article in The Wall Street Journal, there were only 2.19 million homes for sale at the end of September. That is 20% less than for the same date one year ago. Apparently home owners are taking their homes off the market rather than settling for what they consider to be too low a price.
Further details from the WSJ:
The shrinking supply isn’t driving up prices because demand is soft.
Yet there is still a substantial “shadow” supply of foreclosures and other distressed homes, estimated to be more than one million, that is likely to stream onto the market in the coming years. The pent-up supply is another constraint on any of the price gains that might normally occur when supply falls.
The decline in inventory also suggests that there are fewer opportunities for buyers and sellers to strike deals. That can further chill sales, as buyers become afraid to overpay while sellers are similarly cautious about underpricing their homes.
The number of houses for sale was down in all 146 markets tracked by Realtor.com, according to Realtor Mag. Some specific cities: Detroit -28%, Atlanta -30%, Orlando -46%, Phoenix -47% and Miami -49%. More data is available in a WSJ graph:
See The Wall Street Journal for an interactive version of the above graphic.