As the year ended, inventories retreated to virtually the same levels as last year, erasing the year-over-year inventory growth and raising questions about the possibility of a return to the market dynamics of last year, which saw inventory shortfalls drive price increases and curb demand. Inventories fell 6.24% in November as the home sales season ended and owners pulled their homes off the market until spring.
Facing more or less the same supply levels as a year ago, markets are hoping the decline will evaporate quickly when sellers list their homes for sale as the opening of the spring season nears. The freeing of another 1.4 million homeowners from negative equity in 2013 (RealtyTrac) and the record price gains realized in 2013 could encourage sellers. If not, markets with the greatest shortages could be vulnerable to a repeat of last year
The median list price on realtor.com ended the year with the greatest year-over-year gain in the three year history of the trend report. The year ended strongly with a 1.62% increase in November and an annual increase of 8.06%.Median age of the inventory is down by 5.1 percent and the number of units for sale is essentially unchanged, which are all positive signs of stronger market health compared toDecember 2012.
On a month-over-month basis, December 2013 shows the first significant signs of the usual seasonal winter slow down. The total U.S. for-sale inventory of homes declined from 1,846,155 units in November to 1,731,017 units, age of the inventory rose from 101 to 112 days and the median list price declined from $197,700 to $194,500.
“Bidding wars and all-cash offers left many home buyers empty handed after the summer home buying season. In fact, many buyers remained in the market throughout the fall in an effort to get ahead of the competition – extending the summer season and making housing indicators resilient to usual seasonal patterns. The housing market in December finally displayed the expected winter seasonal slowdown in median list price, inventory and median age of inventory,” said Errol Samuelson, president of realtor.com®. “As we open the new year, the first quarter inventory figures are especially crucial as our first barometer into seller confidence for the 2014 home buying season. The market is still showing significant demand, but in order to have a strong home buying season, sellers need to put their homes on the market.”
While December data is strong, other factors could impact consumers when it comes to 2014 housing. The National Association of REALTORS® (NAR) REALTORS® Confidence Index results recently highlighted concern about the effect of the Qualified Mortgage rules that came into effect in January 2014, which may further decrease credit availability. Another fear was the impact on consumer finances of the implementation of the Affordable Care Act this month.
Key Market Indicators for December 2013
|December 2013||Year-over-Year Percentage Change||Month-over-Month Percentage Change|
|Number of Listings||1,731,017||1 percent||-6.2 percent|
|Median Age of Inventory||112 days||-5.1 percent||10.9 percent|
|Median List Price||$194,500||8.1 percent||-1.6 percent|
2013 Year Highlights:
- Price Recovery Penetrated Most Markets in 2013. The breadth of the price recovery during 2013 was extraordinary. Forty-two markets located across every region experienced year-over-year price growth in the double digits, from Oklahoma City (10.0 percent) to Stockton-Lodi, Calif. (47.3 percent). In December, median list prices for 116 markets were up by 1 percent or more on a year-over-year basis, and 42 markets were up by 10 percent or more. Only 14 of the 142 markets tracked by realtor.com® registered annualized price declines as the year ended.
Median List Price
10 MSAs with the Greatest Year-over-Year List Price Increases
|Santa Barbara-Santa Maria-Lompoc, CA||29.6%|
|Las Vegas, NV-AZ(NV)||29.3%|
|Los Angeles-Long Beach, CA||28.5%|
|Riverside-San Bernardino, CA||26.7%|
|Orange County, CA||26.1%|
- Demand Stayed Strong Throughout 2013. The 2013 home buying season was made famous with its inventory shortages, cash offers and bidding wars. Despite seasonal slowing, December 2013 continued to see considerably short median age of inventory with Oakland, Calif., leading the pack at 48 days. Oakland was followed by Stockton, Calif., at 56 days; Honolulu at 64 days; andSan Jose, Calif., and Sacramento, Calif. at 70 days.
Median Age of Inventory
10 MSAs with the Shortest Median Days on Market
|San Jose, CA||70|
|Fort Lauderdale, FL||71|
|San Francisco, CA||74|
- Spring Inventory Declines Led to Fall Inventory Gains. Many of the markets that experienced multiple bids and fast price gains due to inventory shortages in spring 2013 now have ended the year with the greatest inventory gains as sellers responded to the price increases. These include:Sacramento, Bakersfield, Calif., Orlando, Fla., Lakeland, Fla., Oakland and Fresno, Calif.
For-Sale Inventory: December 2013
10 MSAs with Greatest Year-over-Year Inventory Increases
|Minneapolis-St. Paul, MN-WI(MN)||34.5%|
|Lakeland-Winter Haven, FL||25.4%|