Trulia: U.S. Home Inventory Hits Record Low Since Housing Market Began Turnaround In 2012
Friday, April 14th, 2017
Trulia, a leading destination for homebuyers and renters, released the findings from the Trulia Inventory and Price Watch. This quarterly look at the supply of starter, trade-up and premium homes on the market nationally and in the 100 largest U.S. metros found that markets with the biggest gains in home values since 2012 are facing the tight supply of for-sale homes.
Buyers Face Tightest Inventory Levels Heading into 2017 House-Hunting Season
Nationally, housing inventory hit its lowest level on record in the first three months of 2017. The number of homes on the market dropped for the eighth consecutive quarter, falling 5.1% over the past year. Across different housing segments, starter and trade-up home inventory fell 8.7% and 7.9% year-over-year nationally. Meanwhile, the stock of premium homes remained relatively unchanged since last year, having fallen just 1.7%.
Affordability Becoming a Bigger Obstacle for Starter-Home Buyers
This persistent and disproportional drop in starter and trade-up home inventory continues to make homeownership less affordable – especially for first-time buyers. A typical starter-home buyer would need to dedicate 38.3% of their monthly income to buy a starter home – a 2.9-point increase from last year. Trade-up and premium homes, on the other hand, are still relatively affordable despite being more expensive.
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2017 Q1 National Inventory and Price Watch |
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Housing Segment |
2017 Q1 Inventory |
Change, 2016 Q1 - 2017 Q1 |
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|
Median |
Share |
Inventory |
% of Income |
% Change |
Percentage |
% Change in |
Additional Share Home |
|
|
Starter |
$165,015 |
25.9% |
253,735 |
38.3% |
8.3% |
-0.2 pts |
-8.7% |
+2.9 pts |
|
Trade-Up |
$289,455 |
23.0% |
229,585 |
25.6% |
6.8% |
-0.9 pts |
-7.9% |
+1.6 pts |
|
Premium |
$614,143 |
51.0% |
497,231 |
14.0% |
7.2% |
+1.0 pts |
-1.7% |
+0.9 pts |
|
Among the 100 largest U.S. metro areas. Share is the percent of for-sale homes that fall into each segment, which is defined separately for each metro. Median price for each segment is the stock-weighted average of the median price of each segment in each metro. Some point change estimates may be slightly different than stated values because our differing procedure occurs before rounding. |
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Home Value Recovery May Be Causing Inventory Crunch
A strong recovery may be partly to blame for the large drop in inventory some markets have experienced over the past five years. Housing markets – including San Francisco, Seattle, Nashville, Tenn. and Colorado Springs, Colo., – which have had greater home value recovery since 2012 have experienced larger decreases in inventory. In other words, not only are buyers in the hottest markets likely to be priced out, potential sellers may be locked in to their existing homes.
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Housing Markets with Largest Decrease in Total Inventory Since 2012 |
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|
U.S. Metro |
% Change in Total Inventory, 2017 Q1 - 2012 Q1 |
Housing Stock Value Relative to Pre-Recession Peak |
|
Salt Lake City, UT |
-69.5% |
92.8% |
|
Seattle, WA |
-66.6% |
112.4% |
|
San Diego, CA |
-66.5% |
96.6% |
|
Nashville, TN |
-66.0% |
121.3% |
|
San Jose, CA |
-63.5% |
130.0% |
|
Colorado Springs, CO |
-62.1% |
110.9% |
|
San Francisco, CA |
-62.0% |
132.5% |
|
Cambridge, MA |
-61.9% |
108.1% |
|
Grand Rapids, MI |
-61.9% |
105.1% |
|
Tacoma, WA |
-61.6% |
96.8% |
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NOTE: Among 100 largest U.S. metros. Full data set available here. Housing stock value relative to peak is the current total value of each market's housing stock relative to its pre-recession peak value. See methodology for details of calculation. |
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QUOTES FROM TRULIA'S CHIEF ECONOMIST RALPH MCLAUGHLIN:
- "Recovering home values have proven to be a double-edge sword. While homeowners across the country are thrilled to regain equity in their homes, many have not been in a hurry to trade up. This has added to the inventory gridlock that ties up would-be starter-home inventory from ever coming on to the market, further constraining supply and decreasing affordability."
- "Saving up for a down payment is one of the biggest obstacles to homeownership for first-time buyers. In markets plagued with tight inventory and decreasing affordability, Millennials who make up most of these first-time buyers may find homeownership increasingly out of reach. However, there continues to be an uptick in new construction – which should help increase supply in some inventory-constrained markets."
