An already-low nationwide single-family housing inventory dropped even further in October, which is expected to create problems for first-time buyers in the coming year, according to Redfin’s October housing market report.
Inventory declined by 8.6 percent in October compared to 2015, making 13 consecutive months of annual declines, according to Redfin. The decrease in homes for sale marks the largest year-over-year decline since May 2013. Finalized sales are also down by 3.2 percent.
First-time buyers are viewed by many economists and analysts as critical to increasing the homeownership rate, but the lack of homes for sale is limiting first-time homebuyers ability to find affordable housing. With a national homeownership rate of 63.5 percent for Q3, just 60 basis points above a 51-year low reached in Q2, the future of housing inventory will be tested as 2017 approaches.
Nela Richardson, Chief Economist with Redfin, said, “While the October market rewarded sellers, their gains came at a cost. With no new supply surge on the horizon, finding an affordable home will continue to be an unrelenting challenge for first-time buyers for the remainder of the year and into 2017.”
Buffalo, New York, saw a drastic decrease in inventory, with a 32.4 percent decline since October 2015.In this sellers’ market, one in five homes went under contract within 14 days in October, which increased by 19 percent from 2015. Seattle and Denver were the nation’s fastest markets, with homes going under contract with a median of 13 and 15 days, respectively. Other fast growing markets include Grand Rapids, Portland and Oakland.
Data from the October housing market also shows the median rate of homes on the market has decreased to 49 days, which is five fewer than 2015. Because of the demand increase, national prices of homes rose 7 percent to a median of $269,000 in October, making this the strongest annual price growth since December 2015.
A state showing particular price growth is Florida, with six cities having the leading price growth in the nation. Deltona (18.4), West Palm Beach, (14.8), Fort Lauderdale, (14.2), Tampa (14.2), Fort Meyers (14.1) and Lakeland (13.6) have seen a significant increase in home prices.
“Florida’s growing economy and relatively affordable prices have brought more transplants here this past year,” said Delray Valle, a Redfin agent in West Palm Beach. “Local sellers see that they can price high and make a decent profit on the newcomers. Even homeowners who bought at the top of the market just before the recession can now easily fetch double what they paid for at the time, as long as they are patient enough to find the right buyer.”