The U.S. housing market showed signs of becoming increasingly competitive as inventory continued to tighten with a drop of nearly 98,000 listings compared to this time last year, according to realtor.com®'s October 2019 housing trend report released Thursday.
At the same time, the inventory shortage compounded as homes flew off the market at a faster pace than last year, making it harder for would-be buyers to enter the market despite favorable interest rates.
"Owning a home continues to be a priority for buyers, as we head into the cooler months of the year. Driven by the tailwind of sub-4% mortgage rates, the steady demand for housing is drying market inventory at an accelerating pace," according to realtor.com® Senior Economist George Ratiu. "With dwindling supply, prices maintain their upward pressure, deepening the affordability challenges for first-time buyers."
Spurred by low mortgage rates, the uptick in demand this past spring gobbled up available inventory leaving the U.S. market depleted. Nationally, inventory decreased 6.9% in October, an acceleration from September's 4.1% drop. This decline amounted to a loss of 98,000 listings, compared to a year ago.
Additionally, the volume of new listings hitting the market has decreased by 3.4% since last year. Entry-level inventory saw the largest declines, with the number of homes priced under $200,000 dropping by 15.2% year-over-year. Meanwhile, mid-tier inventory priced between $200,000 and $750,000 dropped by 4.3% year-over-year. The inventory of the nation's most expensive homes saw a slight increase as the inventory of homes selling for more than $750,000 increased by 1.3% year-over-year.
In the nation's 50 largest metros, inventory declined by 5.3% year-over-year. The metros which saw the biggest drop in inventory were San Diego-Carlsbad, Calif. (-20.1%), Rochester, N.Y. (-20.1%), and Phoenix-Mesa-Scottsdale, Ariz. (-20.0%).
In addition to having less inventory compared to last year, homes also sold more quickly. Nationally, homes sold in 66 days in October, three days faster than last year. Raleigh, N.C. (60 days); Hartford-West Hartford-East Hartford, Conn. (64 days); and Birmingham-Hoover, Ala. (67 days) saw the largest decreases in days on market with properties spending 11, 9 and 9 fewer days on the market than last year, respectively. On the flip-side, properties in Los Angeles-Long Beach, Anaheim, Calif. (55 days); San Jose-Sunnyvale-Santa Clara, Calif. (42 days), and Las Vegas-Henderson-Paradise, Nev. (49 days); sold 14, 11, and 11 days more slowly, respectively.
The U.S. median listing price continues to increase due to solid demand, growing by 4.3% year-over-year, to $312,000 in October. Of the 50 largest U.S. metros, 43 saw year-over-year gains in median listing prices. Birmingham-Hoover, Ala. (+15.4%); Los Angeles-Long Beach-Anaheim, Calif. (+13.9%); and Phoenix-Mesa-Scottsdale, Ariz. (+13.0%); posted the highest year-over-year median list price growth in October. The steepest declines in median list price were seen in Minneapolis-St. Paul-Bloomington, Minn.-Wis. (-2.9%), Louisville/Jefferson County, Ky.-Ind. (-2.9%) and Houston-The Woodlands-Sugar Land, Texas (-1.6%).