Key takeaways:
- 646,000 homes were available for sale in September, 22% below the same period last year
- In a comparison with September 2019, current inventory is 53% lower
- The median price of houses listed on the MLS service reached $380,000 in September, 15% above the year before
By Manuel Gutierrez, consulting Economist to NKBA
The housing market has been tight for months now, with demand far outpacing the limited supply for sale. House sales and inventory data typically covered by the media reflects estimates issued by the National Association of Realtors (adjusted with other survey data.)
An alternative source, which relies on actual numbers rather than those obtained via a survey, is the data from the Multiple Listing Service (MLS), which identifies houses for sale offered by brokers who have joined that service. This data excludes non-participating brokers as well as houses sold directly by homeowners who have chosen not to use the services of a realtor.
Based on the MLS data, there were 646,000 homes for sale in September. This is a 22% decrease from the previous year (Figure 1)
While the number of house listings remained fairly stable over the two-year period from 2018-2019, ranging between 1.2 and 1.4 million, last year’s number was a dramatic drop. In September of 2019 there were 1.36 million homes listed. That number dropped by 39% last year.(Note that the data are not seasonally adjusted thus a monthly comparison of the data is not reliable)
Figure 2 displays the differences between the estimate of housing inventory issued by the National Association of Realtors and the MLS data. The latter is typically of a smaller magnitude, because it is restricted to home sellers who use brokerage houses. However, the gap between the two has widened recently. Prior to last year, the MLS data was approximately two-thirds the number of the NAR data. However, this year the level has fallen to approximately one half.
The sharper drop in MLS house listings is the result of the strong demand for housing that voids the need to rely on the use of real estate agents or brokers to complete a sale.
Regardless of whether home sellers are using the services of a broker, home prices continue to rise. The median price of a house listed in the MLS service reached $380,000 inSeptember, up 15% from a year ago. This is 8% higher than the $353,000 median price according to NAR.
Figure 3 displays the trend in house prices over the last five years. Note that, as mentioned above, the data are not seasonally adjusted. House prices are typically higher in the middle months of any year, while prices tend to be lower around the Winter months.
The blue line captures the underlying trend and visually eliminates these seasonal fluctuations.
Current housing inventory for sale is 53% below levels of two years ago.
As indicated by the small bar chart in Figure 3, over the last two years house price increases have been running two to three times higher than during the 2017 through 2019 period, when price increases averaged around six percent.
The MLS data also provides a view of inventory at the state level. Figure 4 displays the trend in inventory for six states. Similar to the national data, inventory for these states remained relatively stable until last yearwhen, as a result of strong demand for housing, inventory dropped precipitously.
Nationally, the current inventory is 53% below its September 2019 levels. For most states the inventory today is between 43% and 64% lower than two years ago. One significant exception is New York where it is just 22% lower. These low inventory levels, coupled with the strong demand for housing, are expected to push house prices even higher over the next few months.
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