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Buyers may finally have an upper hand in negotiating to buy a home, at least in some cities in the U.S., according to a new report.
Realtor.com identified 10 markets where the pace of sales relative to inventory levels has fallen below the national average and sales prices are growing slower than the national average. Among the markets where homebuyers may start to see some relief are Los Angeles, Chicago, Dallas and Nashville.
“Inventory across the country is growing and in these markets the number of homes for sale is growing even faster than the national average,” said Danielle Hale, Realtor.com chief economist on Yahoo Finance’s The First Trade. “We’ve also seen sales slow which is helping to drive down months supply.”
According to Realtor.com, months supply — or how long inventory would stay on the market under the current amount of demand if no new inventory was added — in these 10 markets is greater than four months. Meanwhile in these markets, on average buyers are on seeing active inventory grow at 14.6% year-over-year, compared to the national growth rate of just 4%.
“There’s a lot of uncertainty in the economy now which is driving interest rates lower,” said Hale. “It hasn’t shown up in the consumer confidence numbers yet, but on the home buying side which is a major purchase for most people we are seeing confidence slip a little bit and that’s probably causing some buyers to hesitate.”
The report is in line with data released last month by Trulia, which found that for the first time in almost three years, the number of homes for sale in the U.S. did not drop from a year ago indicating that demand for homes is waning. National Realtors Association data similarly reveals year-over-year inventory increases: Total housing inventory in the U.S. at the end of April increased to 1.83 million, up 1.7% from a year ago. This is a good sign for buyers since record low inventory was one of the factors driving home prices higher.
‘It’s still not going to be easy’
Home prices in the 10 markets are also slowing and in one market — Tampa — home prices have actually declined, according to Realtor.com. Sale prices, on average in these markets are up 1.4%, down from the 8.4% sales price growth during the same time last year. In Tampa, home prices fell 1% — the first year-over-year decrease since 2012.
Nationwide, home price growth has slowed for 12 consecutive months according to the latest data from S&P CoreLogic Case-Shiller national home price index released last month.
But since prices have risen so dramatically these past few years, buyers shouldn’t get too excited, even if they live in the 10 markets highlighted by Realtor.com
“We’re still not seeing prices decline. Just because they are shifting toward buyers, that means you have a few more options as a buyer but it doesn’t necessarily mean you’re not necessarily going to score a deal,” said Hale.
Amanda Fung is an editor at Yahoo Finance.