Spring Housing Market May Be Cooling

Realtor.com®'s February housing report released Wednesday shows 2019 may have one of the coolest spring home buying seasons in recent years as growing inventories drive price cuts. This marks a significant reversal from a year ago when the housing market struggled with 41 straight months of inventory declines.

In February, the median list price increased 7% year-over-year, to $294,800. Approximately 73,000 additional listings are for-sale this year versus last year, increasing national inventory by 6% year-over-year. Much of this available inventory can be traced to the nation's 50 largest metros, where inventory increased by 11% year-over-year. The largest jumps have continued on the West Coast, led by San Jose, Calif., with a massive 125% increase. This was followed by an 85% increase in Seattle, 53% increase in San Francisco, 39% increase in San Diego, and 36% increase in Portland, Ore.
A recent rise in the share of price cuts also hints towards a potential shift into a cooler market for spring. In February, 39 of the 50 largest markets saw an increase in share of price cuts. The greatest yearly increase was felt in Las Vegas, which jumped 19%. It was followed by San Jose, Calif., with a 9% increase, Phoenix with a 7% increase, San Francisco with a 5% increase, and Dallas with a 4% increase.
In February, the number of U.S. homes priced at or above $750,000, more than double the national median, increased by 11% year-over-year. The surge in high end inventory is likely to favor buyers this spring, as they will have more options to choose from. But the same can't be said for the entry-level market where the national inventory of homes priced at $200,000 or below has decreased seven% year-over-year, indicating that availability of affordable homes will remain an issue for many potential buyers.
More inventory means more options for buyers, which has slowly pumped the brakes on a historically speedy market. On average in the 50 largest metros, homes are spending three days longer on the market than last year.
For the first time since realtor.com® began tracking this data in 2013, the share of homes selling faster than 30 days decreased, from 28% last year to 27% this February. The West Coast, which saw the largest inventory increases in February, also saw the greatest increase in days on market. Homes in Seattle, which led the nation, spent an additional 20 days on market compared to last year. It was followed by Riverside-San Bernardino, Calif. with 15 days and Sacramento, Calif.with 13 days.
New market level months supply data, which looks at the balance of available inventory against the current sales pace, confirms that while the market is generally cooling, it still remains a sellers' market in many areas.

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