Declining Sales, Inventories Push Transition to Buyer’s Market

RE/MAX, Denver, said two trends–declining sales and growing inventory–continue to push the U.S. housing market from a seller’s market to a buyer’s market in February.

The company’s monthly National Housing Report said home sales in the 54-market report fell year-over-year for the seventh consecutive month, though February’s downturn of 4.2% was the smallest since the 1.1% drop that started the streak in August. At the same time, inventory grew by 5.8% year over year, marking the fifth consecutive month of growth following a decade-long trend of shrinking inventory. The months’ supply of inventory also grew in February from 3.1 a year go to 3.4 in February.

The median sales price increased to $240,000, a year-over-year gain of 5.5% and a February record. That followed January’s upturn of 4.6%. Days on market increased to 63, one day higher than a year ago and four days higher than January.

“Trends of five months or more often indicate significant shifts, and the year-over-year trends in declining sales and rising inventory have both reached that length now,” said RE/MAX CEO Adam Contos. “Slowing sales and growing inventories that benefit buyers and at the same time the record prices that benefit sellers. The big picture supports an ongoing return to more balanced conditions.”

Contos said the next few months will determine whether the shift brings a wave of buyers into the market for the spring selling season. “Members of our network are reporting high local demand along with a need for even more inventory,” he said. “The optimism for a solid spring exists–and a more balanced market certainly contributes to it.”