Inventory Shortage Makes for Competitive 2014 Housing Market -Redfin

Sales, prices, and inventories all showed some signs of life in April.  Redfin said today that median home prices were up in all markets on an annual basis, a national increase of 9.4 percent.  While home sales are down by 7.6 percent year-over-year, sales did improve by 12.4 percent over their weak sales performance in March.  There were 5.2 percent more homes for sale in April 2014 than in the previous April and 3.7 percent from the prior month.  This means, Redfin said, that buyers have more options in some markets.

While home prices have risen for 28 straight months, the size of the increases has steadily diminished from the 20 percent annual gains that were happening in late 2012.  From March to April the median sale price rose 3.6 percent.  During the same period in 2013 the gain was 4.6 percent.  Redfin called the annual increase in April, 9.4 percent, strong and healthy and one that was more consistent across cities.  "When some cities have 25 percent price gains while other cities are flat or down in price, it can lead to difficulty for buyers, sellers and even banks financing mortgages," the Redfin report says.  "If all cities share stable and sustainable housing price appreciation, the whole economy stands to benefit."

The April gains in home sales were geographically uneven.  Atlanta and Oakland had sales that were more than 4 percent higher than in the previous April and Tacoma was up slightly but nine metro areas had double-digit annual declines in home sales, notably Las Vegas which was down 16.4 percent, Philadelphia, 16.3 percent, and Long Island, 15.2 percent lower.

While the inventory of available homes was up nationally Redfin said the situation does not look great across many markets.   Markets with the highest demand have seen inventory tighten further.   In Denver the inventory is off 18.6 percent and in San Francisco 16.0 percent.  Austin, Portland, Oregon and Raleigh-Durham have also seen a tightening of 5 to 10 percent. 

Redfin said that with half of all markets experiencing a year-over-year decline in homes for sale, things are still difficult. Buyers and potential sellers who want to trade up are asking, "Where is all the inventory?"  The tight inventory, rising prices, and higher interest rates are all contributing to home affordability challenges. While the balance of power has recently shifted a bit to the buyer side, Redfin said 2014 still looks like it will present a competitive housing market.