The Wall Street Journal is reporting that the number of homes listed for sale has declined in many U.S. cities in November, reversing a strongly negative trend.
In the 27 metropolitan areas covered in the ZipRealty survey, housing inventory dropped by an average of 28% over the last year and 2.4% during the last month. In Austin, the number of home listings slid by 19.8 percent over the last year and 3 percent between October and November.
The slide in inventory is a positive step: it means that supply and demand are returning to a more normal balance after a very difficult year. While seasonal trends will cause inventories to rise again in January, it’s the year-over-year trend that is most important.
According to the Journal, the one month change is less significant as “Inventories typically decrease modestly in November compared with the previous month, according to Zelman & Associates, a research firm. Over the past 25 years, the average change has been a decline of 1.8%.”
The Journal also notes that the exact level of supply is impossible to pin down, partly because multiple listing services don’t include all the foreclosed homes that banks are preparing to put on the market. As of the end of October, banks and mortgage investors had 639,000 foreclosed homes for sale across the U.S., Barclays Capital estimates. That’s equivalent to more than 10% of expected U.S. home sales this year. The bank-owned homes are largely concentrated in Florida, California, Arizona and Nevada.
The MLS also excludes newly constructed downtown Austin condo units that are not being sold by realtors. This means that most of the units in the Austonian, Four Seasons, W, Spring, and other projects are excluded from the inventory numbers. Since the same was true last year, the 12 month change does seem to be a significant development.