‘Feverish pitch’ of home sales further cripples housing supply

Homebuyer competition reached new extremes in March, as sales shot up and an already historically low supply of inventory was further reduced.

Closed sales spiked 34.3% from February and 15% from March 2020, according to Remax’s National Housing Report. Broken down by the 53 largest metro areas, New York led the nation with a 62.6% annual surge in transactions as more borrowers returned to cities they’d left en masse a year ago. The Empire state greatly outpaced the rest of the country, with the second and third largest year-over-year increase in San Francisco at 37.9% and in Miami at 36.9%.

March inventory fell to a new record low for the ninth straight month, diving 8.9% month-over-month and 45.2% year-over-year. The housing supply also dwindled to a new low of 1.1 months from 1.7 months in February and 3.2 months the year before. The previous record was 1.6 months. A 6-month supply defines market equilibrium.

Providence, R.I., experienced the steepest annual drop in inventory at 84.4%. Albuquerque, N.M., and Hartford, Conn., trailed closely by decreasing 82.6% and 82.5%, respectfully. At the same time, Albuquerque, Denver, Seattle and Boise, Idaho all tied with the lowest supply at 0.4 months.

"It's definitely a seller's market right now, and homes are selling at a feverish pitch, further crimping this historically low inventory situation," Adam Contos, CEO of Remax Holdings, said in the report. "New listings are coming onto the market, but because houses are selling so fast, the inventory total can't keep pace.”

Time on market fell to a 38-day average from 42 in February and 54 in March 2020. It’s the fifth time the average dipped below 40 days and all five occurred in the last seven months. The report record was set at 36 days in November 2020. Salt Lake City had the fewest days on market with 16, followed by 17 in Boise and Seattle. Conversely, the longest times came in Des Moines, Iowa, at 94 days, Miami at 90 and New York at 84.

With this frenzied activity, the median sales price climbed to a new record of $303,000, growing 4.5% monthly from the prior record of $290,050 and 14.3% annually. With the exception of a 4.5% annual dip in Honolulu, the median home price grew in every market. Boise again showed up on the leaderboard, this time topping all metros with a 31.9% median price jump from March 2020. Augusta, Maine, followed with 21.6%, then came 20.8% in Pittsburgh.

Housing has become increasingly unaffordable, with the median home price growing 69.7% since 2012 compared to 28.8% for the median income over the same period, according to a separate study from LendingTree.