The housing market was still underperforming in February, according to the National Association of Realtors. With just a slight bump up from January, total sales are still running below expectations for the year due to the lack of supply.
The number of homes for sale, which is down from a year ago and well below the current demand is holding back sales and driving prices. The number of listings from January to February historically rises about 6 percent, but this year it inched up less than 2 percent.
This is “all about inventory,” said Lawrence Yun, chief economist for the National Association of Realtors (NAR). “Smaller local builders are not in the game. They don’t have access to credit.” Builders are catering more to higher-end buyers, and that leaves very little (or nothing) for lower-end, first-time buyers to move into. Move-up sellers don’t help, because the minute they sell turn around and buy, so the housing supply doesn’t change.
Lack of supply is pushing prices again nationally, up 7.5 percent year over year to a median sale price of $202,600 in February, according to NAR. Yun calls this reacceleration of price gains, “unhealthy.” Affordability had been helping the housing recovery inch along, but now it is weakening and fast becoming a roadblock to homeownership. Still-rising rents are contributing to the problem, keeping first-time buyers from being able to save for a down payment.
The number of listings should bounce higher in the coming spring and summer months, but price will govern sales.