As the housing market heads into the busy spring selling season, signs are not looking good for prospective buyers looking to purchase a new home.
According to Zillow, the number of homes listed for sale in the 99 largest metropolitan areas nationwide covered by the firm was down 16.6% on a yearly basis through February. As of Feb. 23, the Seattle-based analytic firm estimated that approximately 114.4 million homes are available on the open market.
Even though the inventory of homes continues to fall in February, Zillow said it is not as severe as the prior month when there were 17.5% less homes listed for sale compared to January 2012. Furthermore, almost two-thirds of the areas surveyed showed a smaller year-over-year decline in for-sale homes in February than in January.
“The supply of for-sale listings continues to dry up, driven in part by potential sellers trapped in negative equity and homeowners that won’t sell out of fear they won’t be able to find a suitable home to buy later,” said Stan Humphries, chief economist for Zillow.
Across the country, the greatest decreases in inventory over the last year were among more expensive homes, where the availability of top-tier properties fell 20.5%. Meanwhile, the inventory of middle-tier homes dropped 17.2% and bottom-tier properties listed on the market fell by 9.1%.
Large California metropolitans experienced the biggest reduction in homes for sale over the past year. Among the 30 largest cities covered by Zillow, four of the top five in inventory contraction were located in the Golden State. Inventory in Sacramento fell by 48%, followed by Los Angeles, San Francisco and San Diego, which were all down by 45.7%, 40.9% and 39.4%, respectively.
Minneapolis-St. Paul rounded out the top five with an inventory decline of 36.7%.
On the other hand, only five cities showed more homes for sale overall last month than in February 2012, including El Paso, Texas, Albuquerque, N.M., Little Rock, Ark., Fort Myers, Fla., and Youngstown, Ohio.
Humphries said inventory tightness has contributed to the rise in home values. Because of this trend, he expects more owners to list their properties for sale in the future.
“While this inventory is coming, it may still be a frustrating spring for buyers vying for what inventory is available,” Humphries added. “It’s important to be patient and not commit to paying beyond one’s comfort level in the heat of negotiations.”