Housing inventory offers 'glimmer of light on the horizon'
While the supply of homes still has a ways to go before becoming a buyer's market, incremental steps have taken place, especially on the West Coast, according to Zillow.
January marked the first time since 2014 that the year's opening month posted an annual gain in inventory, with an increase of 1.2%, or 19,455 units. Additionally, the housing supply grew year-over-year in four of the last five months.
Before the second half of 2018, inventory dropped year-over-year for 44 consecutive months. The recent trend has helped, but housing supply still sits well below peak levels.
"For four years, it felt like homebuyers couldn't catch a break as for-sale inventory became tighter and tighter with each passing month," Aaron Terrazas, Zillow's senior economist, said in a press release. "But during the second half of 2018, something shifted. Homebuyers aren't out of the woods yet, but there is a glimmer of light on the horizon. The number of homes on the market is hesitantly inching higher — now approaching the highest level in a year and a half."
Big, expensive West Coast cities — particularly those in California — had the highest inventory gains. San Jose led all housing markets with a 42.9% annual increase. Seattle followed with 36.9% and San Diego finished third at 31.9%.
"In the priciest markets, the jump has been even more definitive. But buyers should not mistake a few more options for a sudden bounty. With home values still increasing at a steady clip, it's clear that demand still outstrips supply, and with mortgage rates down from recent highs, the first quarter of 2019 is shaping up to be more competitive than the lull we saw as 2018 came to a close," Terrazas said.
Homebuilders are met with the challenges of high land and lumber costs, as well as regulatory hurdles. New construction has been lethargic due to these difficulties.