In case you hadn't noticed, demand for housing has been
outpacing supply in many areas of the country.
reported Saturday that the trend of too much demand and too few
homes is starting to slow down in some parts of the United
States. And that's a good thing.
The newspaper said that in 21 of 24 major metropolitan markets
tracked by residential brokerage ZipRealty, new listings
outnumbered new sales contracts for the 30 days ended March
This prompted ZipRealty CEO Lanny Baker to say, "Supply may
finally start to keep pace with frenzied buyer activity."
Los Angeles homeowners, for example, put 16,170 homes on the
market from mid-February to mid-March. During this same period,
Realtors only initiated 9,533 sales contracts.
Areas in which sales outnumbered new listings included Las
Vegas, Raleigh, N.C., and Washington, D.C., according to
The supply of homes on the market stood at 4.7 months in
February, up from 4.3 months in January. Realtors consider a six
to seven-month supply to be a balanced market between buyers and
The tighter-than-normal supply has raised prices and even led
to multiple offers in many markets. Conversely, as the supply
side of the equation grows, it will become more of a buyer's
The lower-than-normal supply of homes for sale causes a
slowdown in the market. Buying a home is a big decision and
buyers want as much choice as possible. When supply is down,
those who are not desperate tend to wait. From a practical
standpoint, of course, the fewer homes there are for sale - the
fewer that are sold.
As if to emphasize that point,
reported Monday that sales of previously owned houses fell 0.6
percent to a 4.92 million annual rate last month, based on
figures from the National Association of Realtors in
On a historical basis, low mortgage rates, rising property
values and employment gains have led to more home sales. The drop
in the inventory, however, may be the force slowing down
David Sloan, a New York-based senior economist at 4Cast Inc.,
said, "The slowing is temporary. There is a shortage of supply.
The housing market will revive."
None the less, stocks fell after the report, with the SPDR
S&P Homebuilders (NYSE:
) ETF declining 1.2 percent Monday mid-morning.
Federal Realty Investment Trust(NYSE:
) was down 0.4 percent at $112.88 while Vornado Realty Trust
) was up 0.3 percent on the day so far.
Meanwhile, home builder Toll Brothers, Inc. (NYSE:
) was down 2.8 percent and Lennar Corp. (NYSE:
), another home builder, declined nearly two percent on the day's
As of this writing, Jim Probasco had no position in any of the
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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