A squeeze on housing inventory has loosened a bit for the first time in nearly a year.
The total number of homes for sale in the U.S. increased 3.9% in May from April, according to data released Wednesday by real estate website Zillow. It’s the first time in 10 months that inventory has gone up and just the fifth time in the last two years.
House hunters navigating a frenzied real estate market will welcome the news. Low interest rates for mortgages and a desire for more space to work from home during the pandemic have sparked a rush on homes in the last year, sending prices soaring to record highs and the amount of available inventory plunging to a record low earlier this spring. The chart below shows the degree to which the hot real estate market has depleted housing stock in the last year.
Housing inventory shrank by 31.2% between May 2020 and last month, reflecting the trend toward remote work and suburban living that began with the pandemic. With greater demand for homes than supply, the typical home went under contract in just six days in May and sold for a record $287,148, according to Zillow data, which goes back to 1996. Buyers are bidding above list price more often and taking other steps to make their offers more attractive to sellers, like waiving the home inspection or paying all in cash.
A boost in the number of homes for sale in May could be a sign that the crunch is finally easing, but it will take some time before any inventory gains have an effect on the market, Zillow economist Treh Manhertz wrote in a commentary. In the meantime, the number of sales has started to drop off, due to those soaring prices and a shortage of sellers.
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