Spring home buyers might be surprised that national housing data have pointed to a recent market slowdown. Although nationally new construction starts and existing home sales have been sluggish in recent months, buyers in many local markets will need to move a bit faster this year than last year in order to snag their dream house.
To measure how fast the homes in a market are moving, we calculated the share of homes for sale on Trulia two months ago (on February 14, 2014) that are still on the market today (as of April 14, 2014). Faster-moving markets have a lower percentage of homes still on the market after two months, while slower-moving markets have a higher percentage.
Our two-month measure is similar to days on market (DOM): in general, housing markets with more inventory and fewer buyers will have a higher share of for-sale homes remaining on the market after two months and a higher median DOM. But we prefer our two-month measure over DOM as an indicator of how quickly homes in a market are moving for the following reason: if lots of new inventory suddenly comes onto the market, then the median days on market could go down thanks to all those newly listed homes. Therefore, a low median DOM could indicate that (1) buyers are snapping up homes quickly, so homes aren’t staying on the market long (i.e. it’s a seller’s market) or (2) a lot of new inventory has just come onto the market (i.e. it’s a buyer’s market). As a result, it’s difficult to decipher what’s really going on based on DOM alone, making this traditional measure potentially misleading.
Inventory Is Up This Spring, But It’s Going Fast
Nationally, 55% of the homes listed for sale in mid-February were still on the market in mid-April. That’s down a bit from 56% for the same period last year. The slight quickening of the national market is being driven mostly by homes priced at the low end of the market. To see this, we divided each of the 100 largest U.S. metros evenly into three price tiers (with each metro having its own price cutoffs based on what’s considered high-end, mid-range, and low-end locally). On average, at the national level, the low-price tier moved fastest, with 49% of the homes listed two months earlier still on the market in mid-April; in contrast, 62% of homes in the high-price tier were still on the market after two months.
Furthermore, the low price tier sped up more than the other tiers compared with a year ago, dropping 3 points in 2014 versus 2013, compared with 1-point drops for the middle and high tiers. As always, though, the national trend hides big differences in local markets, many of which are quickening while others are slowing.
Senior Director, Coldwell Banker New Homes Division
With over 200 condominium, townhome and loft projects successfully marketed
“Fewer properties for sale with such remarkably low interest rates make it a great time to sell but a more difficult time to buy”