Tight US housing market uncoils, sellers ready to cash out

Boston

PROSPECTIVE home sellers who sat tight as US prices climbed higher and faster than ever during the pandemic are finally emerging to cash out, a step towards easing a dire shortage in the frenzied housing market.

The number of US homes for sale climbed 6.7 per cent in early June from the same weekly period in May, according to Haus, an investment platform for homebuyers. That was the biggest increase since Covid-19 lockdowns took hold last year. Listings rose in 54 of the 100 metropolitan areas measured, including the regions around Philadelphia, New York, Boston, Detroit, Denver and Seattle.

"Sellers are saying, 'it's time, let's make the money,'" said Julie Welter, an agent with EXP Realty in Pittsburgh, which had the biggest supply increase in Haus's data. "With the world opening up again and the vast majority of people being vaccinated, it has given a new comfort level to people."

The housing market is long way from normal, with inventory still down almost 38 per cent from a year earlier and near historic lows. But with bidding wars erupting from coast to coast, any sign of increased supply is a welcome respite for buyers.

More listings also may help ease a problem contributing to the scarcity: sellers staying put because it's a struggle to find something else to purchase.

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Throughout the pandemic, homebuyers clamored to take advantage of record-low mortgage rates and job flexibility to move, only to find the scant homes available were quickly being swallowed up. The median US existing-home price shot up 19 per cent in April from a year earlier to a record US$341,600, according to the National Association of Realtors, helping owners gain equity.

The end of lockdowns also is bringing out sellers who were reluctant to have home shoppers traipsing through their kitchens and bedrooms. Some people also are eager to move closer to the families that Covid kept them away from for too long, said Ralph McLaughlin, chief economist at Haus.

"People who were thinking about selling in two or three years may have accelerated their plans," Mr McLaughlin said. "They're selling now to realise the 20 per cent equity they've gained in the past year."

Shauna Pendleton, a Redfin agent in Boise, Idaho, said 35 sellers have talked to her this year about listing properties. That's about twice as many as in the same time in 2020, she said. The area has seen some of the fastest price growth in the country, with home values up 42 per cent in early June from a year earlier, according to Redfin.

"These are mostly retirees," Ms Pendleton said of her new seller clients. "The lockdown has given people a whole new perspective about where they want to live. And they're missing their family."

The Allentown, Pennsylvania, region - a hot market for New Yorkers and New Jerseyans looking for a more affordable area - has seen listings climb 30 per cent from extremely low levels in early May, according to Haus, which excluded homes that are under contract from its data.

With houses going for well over their asking price, many locals are now being tempted into selling and moving to cheaper spots elsewhere in the state, said Tim Tepes, president of the Greater Lehigh Valley Realtors group. Even as new listings are rising, homes are quickly finding buyers, he said.

Mr McLaughlin said he expects US home-price growth to slow to less than 10 per cent by the end of the year. Demand may also cool as buyers are priced out, especially if borrowing costs start to rise, he said. Federal Reserve officials indicated this week that they expect two interest-rate increases by the end of 2023 - sooner than many thought.

"The same force leading to new supply may be the same force that reduces the ability of homebuyers to keep interested in buying the home," Mr McLaughlin said. "That's mainly rising prices."

The market for newly built houses may also be easing. Homebuilders have been jacking up prices because demand was too high for them to keep up with. Now some buyers are feeling a bit of sticker shock, said Ali Wolf, chief economist for Zonda, a homebuilding data provider and consultancy.

About 40 per cent of builders surveyed by Zonda in May listed buyer hesitancy among their challenges, up from about 20 per cent the month before. As a result, the new-home market has gone from "unbearably" hot to just hot, she said.

In Austin, Texas, agents are reaching out to homeowners by phone and text, telling them how much they can make by selling. That message is starting to resonate, said Alex Wright, an agent with Local Life Realty.

Ms Wright, who grew up in the area, says her childhood best friend's parents, now in their 60s, want to move to the Midwest to be closer to her grandmother. Austin isn't the same place anymore. It has gotten expensive, and there's a line for everything from tacos to coffee, not to mention housing, she said. BLOOMBERG