The housing market has been feeling the effects of an inventory shortage for the last year, but now it’s hitting a record low, according to Redfin. The four weeks ending on January 21, 2021 show a 44% drop in inventory in rural areas compared to a year prior.
The lack of homes hitting the market in these outlying areas is driving the housing shortage. But inventory is lacking everywhere. Suburban areas saw a 38.4% drop in for-sale homes, and urban neighborhoods have decreased 16.9%. However, urban areas are fairing better than they did in May and June, which saw a 21.5% drop.
As for the average, the four weeks ending on January 17 hit an all-time low—a 34% drop year-over-year. New listings were also down 10%, which is the biggest drop in the last seven months.
“Buyers looking for homes in urban areas–where supply is down, but not by as much–will have more luck than buyers searching outside the city,” said Daryl Fairweather, Redfin Chief Economist. “Developers are focusing on creating new homes outside city centers, where there’s more room for sprawl, but that could mean the shortage in urban areas will worsen over time, with fewer homes being built.”
Houses that do hit the market sell in record time. Houses in rural areas usually spent 39 days on the market last year. But now, those homes are selling 29 days faster. Homes in suburban areas are selling 22 days faster, compared to experiencing 30 days on the market last year. And homes in urban areas are selling 14 days faster—they spent an average of 36 days on the market last year.
The competitive nature of trying to purchase a home has driven up the median home-sale price, as well. In November, the median price of a rural home went up 17.7%. And in the period ending on January 21, it has gone up another 16%.
All markets are seeing prices increase, but not as much as the rural areas. Suburban home prices rose 14.5% year over year, and urban homes went up 15.2%. Even though these are smaller numbers than the rural homes, they’re the biggest annual increases since 2017.
For more on why the market is experiencing such unprecedented inventory shortages, visit Redfin.