Thinking of buying a home? You may face some stiff competition.
The number of homes for sale nationwide fell 2.5% in September from last year, according to a Realtor.com study released Tuesday. The drop in inventory was prompted by low mortgage rates and has led to fast-paced sales and higher home prices.
U.S. median listing price rose 4.3% to $305,000 in September from the same time last year, according to Realtor.com. Though home prices continued to rise, it was at a slower pace than last year, when median listing price increased 7.3%.
“Consumers are clearly responding to the lower rates, and in fact the only thing that’s not responding is the supply pipeline, which is why we are seeing this tremendous decline in inventory as consumers continue to buy in this latest month,” said George Ratiu, senior economist for Realtor.com.
Homes averaged 65 days on the market in September, a near-record pace, even as fall tends to be a slower season for sales activity. A home spent one more day on the market compared to last year and two more days from August.
Meanwhile, mortgage and refinance applications are up more than 50% from last year, according to a recent Freddie Mac analysis.
Competition speeds up
Fannie Mae previously predicted that inventory would see a modest rise in 2019, but the low-inventory trend could be accelerating, at least according to Realtor.com, September’s 2.5% decline in inventory comes after a 1.8% dip in August.
Inventory of homes under $200,000 declined 9.8% per year since May 2014, according to the report. But for the first time in 18 months, the number of mid-priced homes, priced $200,000 to $750,000, saw 0% growth. Analysts predict that mid-market home availability will start to decline next month.
“When you look historically, new homes in the affordable range have never been a problem until this cycle. Most new product coming on the market is at the high end, and we don’t really have a lot of new product in the affordable range where a lot of today’s young buyers, particularly in the millennial range, are looking to buy,” said Ratiu. “We’re seeing a flatlining in inventory after several months of growth, which at this rate, is likely to indicate inventory in that range is likely to shrink.”
Inventory of homes over $750,000 continued to see 4.7% inventory growth, but analysts predict declines in the number of high-cost homes for sale by February 2020.
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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