National Supply of Homes For Sale Rises to 4.1 Months in March 2019

By Shu Chen Housing Affordability, Real Estate

As the U.S. housing market strengthened over the last ten years, the inventory of homes for sale fell to a historical low. So how is the inventory shaping up early this year? Nationally, the number of homes for sale equated to a 4.1-month supply[1] in March 2019, up from a 3.4-month supply in March 2018.

High-Priced Homes Have the Most Supply

Figure 1 breaks out the months of supply into four price tiers: low price (0-75 percent of the median list price), low-to-middle price (75-100 percent of the median list price), middle-to-moderate price (100-125 percent of the median list price) and high price (125 percent or more of the median list price). Usually the high-price tier has the largest supply and the low- to-middle-price tier has the lowest supply. The differences in the months of supply among the four price tiers were greatest during 2007-2009 crisis period, when the high price tier peaked at 19.1 months while the other tiers remained under 15 months.

Homes Don't Spend Long on the Market

Here’s how each price tier’s months of supply in March 2019 compares with history:

  • The low-price tier had a 4.4-month supply in March, up from 3.8 months in March 2018 and about one-third of its peak in January 2008.
  • The low- to middle-price tier had a 3.1-month supply in March, up from 2.7 months in March 2018. The March 2019 supply was less than one-quarter of its January 2009 peak.
  • The middle- to moderate-price tier had a 3.3-month supply in March, up from 2.7 months in March 2018. The March 2019 supply was less than one-quarter of its January 2008 peak.
  • The high-price tier had a 4.9-month supply in March, up 0.9 months from March 2018. The March 2019 supply was about one-quarter of its January 2009 peak.

State Inventory at Low Levels

With demand strong and supply tight, many homes didn’t spend long on the market in 2018.Figure 2 shows that over the past two years the share of homes selling within 30 days of the initial list date[2] has been at the highest level since 2000. In March 2019, the share selling within 30 days was 23.2%, down from the peak of 26.2% in May 2018 but still higher than the pre-crisis peak of 14.6% in September 2005 and almost double the level during the July 2011 trough. Figure 3 shows the share of the for-sale inventory that was on the market for more than 180 days. In March 2019, that share was 21.9%, which was about the same with the 2018 average of 20.7% but only about half of the August 2011 peak of 40.2%.

Supply is Up in Most Large Metros

Figure 4 shows the months of supply in the U.S. (based on data for 51 CBSAs) and selected CBSAs in March 2019 and March 2018. Nationwide, the inventory increased 6.8% year-over-year in March, with the supply at 4.1 months in March 2019 compared with 3.4 months in March 2018. Out of 20 CBSAs, 19 showed increases in months’ supply compared with a year earlier. Miami had the largest increase in supply, gaining 2.4 months, from 8.5 in March 2018 to 10.9 in March 2019.

[1] The months of supply, or months of inventory, is calculated as the ratio of the for-sale inventory at the end of the month to the number of homes sold during the same month, and represents the number or months it would take to sell the inventory at that month’s sales pace. The U.S. statistics are based on data for 51 Core Based Statistical Areas (CBSAs). To determine the price tier, the median list price was the median of homes listed in the 51 CBSAs for the given month.

[2] Figures 2 and 3 show a rolling 12-month average.

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