With housing inventory hovering at record lows, any kind of gain is good news for potential homebuyers.
According to new data from Trulia, housing inventory grew 12.2% in the second quarter, compared with 3.9% last year. Thirty of the country’s 100 largest metros posted annual inventory increases last quarter. This is significant because 25 of them actually rebounded from inventory decreases last year.
Nashville, Tenn. and Salt Lake City, Utah topped the list of metros with the largest inventory growth. Builders have been busy over the past year (both markets built more than their historic averages in 2017).
Nashville posted a 52% inventory surge in the second quarter, a stark comparison from a 1.6% decrease the same period last year. Salt Lake City experienced a 48.6% second-quarter inventory increase, compared with a 16.0% decrease, said Trulia housing data analyst Alexandra Lee.
Fort Worth and Dallas in Texas, Greensboro, N.C., San Diego, Calif., Washington, D.C., Portland, Ore., Silver Spring, Md. and Little Rock, Ark. round out the list of top 10 metros that experienced the most growth.
Cities notorious for being unaffordable and short in supply also experienced some “unusual inventory relief,” according to Lee.
San Diego posted the largest inventory growth among unaffordable metros — a 22% increase compared to a 28% decrease the same time last year. New York notched a 1% increase since last year. Though seemingly minor, it is the first time since the third quarter of 2015 that the metro recorded an increase.
Trulia defines inventory as the number of single family, condo and co-op homes listed for-sale each Wednesday in the middle month of the quarter (for the second quarter that month is May). Quarterly inventory totals are based on the median of the count on each Wednesday.
Lack of inventory, lack of affordability
While the supply boost may seem like an encouraging sign, it’s far from the necessary number of homes needed. “This seasonal inventory jump wasn’t enough to offset the historical year-over-year downward trend that has continued over 14 consecutive quarters, starting in the first quarter of 2015. Despite the second-quarter gain, inventory was down 5.3% from a year ago,” said Lee.
She points out that a median home in a metro like San Francisco costs 69.5% of a family’s median income, so an increase in inventory wouldn’t really assuage a first-time homebuyer who is still very much priced out of the market.
“This inventory growth is heartening, but it hasn’t stopped the relentless march of unaffordability. More properties may be on the market, but the upward creep of prices and mortgage rates is putting homes in these metros further out of reach,” said Lee. “More inventory may be helping to cool off the bidding wars in these areas, but homebuyers are getting no relief from the unaffordability squeeze.”
Melody Hahm is a senior writer at Yahoo Finance, covering entrepreneurship, technology and real estate. Follow her on Twitter @melodyhahm.
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