With demand high and interest rates low, the new year brought tidings of hope to the home industry. Yet amid the positive outlook for 2020, the housing shortage continues, now creeping into even the luxury segment, which has had a relatively steady inventory. In December, the decline in the supply of top-priced homes fell 4.4 percent, over double what was seen the previous month. And as the supply dwindles, the cost of houses are expected to rise, potentially pricing even more people out of homeownership.
December is not the most popular time to list a home for sale historically, but this past December it was particularly unpopular.
The supply of homes for sale was 12% lower compared with December 2018, according to realtor.com. The decline was much steeper than the 9.5% annual drop in November. Buyer demand is so strong, that whatever is on the market is going quickly.
The shortage of homes for sale is worst on the low end of the market, but the supply drain is actually accelerating across all price tiers, including the most expensive homes.
In December, the supply of entry-level homes, those priced under $200,000, fell 18.1% annually, a larger drop than the 16.5% decline in November. In the midrange, the supply of homes priced between $200,000 and $750,000, dropped 10.2% annually, compared with November’s decline of 7.4%. At the top, the number of homes for sale priced over $1 million fell 4.4%, compared with November’s 2% decline.