Extreme weather across the country this winter worsened an existing crunch on the supply of houses for sale, pushing inventory to a record low and leading the price of an average home to spike—already—above its 2020 peak.
Storms, floods, and power outages across the country deterred potential sellers from placing their homes on the market, according to a Realtor.com report released Thursday. There were 49% fewer, or 496,000, homes "missing" for sale this February versus the same month last year. New listings declined 25% year-over-year.
The result is expected to be a competitive spring season for the housing market, the Realtor.com report said. The market traditionally heats up in the spring anyway, but this year it collides with a frenzied housing market already thriving on relatively still-low mortgage rates and a pandemic-driven fever for more space away from cities. The competition for homes has pushed the median listing price up 14% when compared to the same time last year, to $353,000. This surpasses the highest price seen in 2020 and does so “unseasonably early,” according to the Realtor.com report.
"Last month's record cold and snowstorms likely caused sellers to hit pause, even if only temporarily," said Realtor.com chief economist Danielle Hale in a statement accompanying the report. "However, in today's inventory-starved market, any setback is significant. Unless we see some big improvements in the new listings trends over the coming months buyers can expect stiff competition.”
The typical home spent 70 days on the market in February, 11 days less than a year ago. This could be because 207,000 fewer homes were newly listed for sale during the first two months of 2021, when compared with the average for the same time period over the last four years. There need to be 25% more new listings in March and April relative to last year’s figures for those months just to reach the same inventory level as April 2020, according to the report.
To be sure, climbing mortgage rates portend a slowdown in demand. Ultra-low rates helped spark the home-buying surge during the pandemic, but the rates have increased by nearly 14% since the start of 2021. The rate for a 30-year fixed mortgage just experienced its largest single-week jump in nearly a year, according to data released by the Mortgage Bankers Association (MBA) Wednesday. It now stands at 3.23%, by MBA’s count.
Government lender Freddie Mac has 30-year rates slightly lower, at 3.02% as of Thursday, but that’s the highest they’ve been since July. Still, it's better than 2020's high of 3.72%.