The quick-paced decline in housing inventory has slowed significantly, according to the latest report from Realtor.com. Data from July revealed a 5.24% drop in the supply of homes for sale nationwide, marking the second month in a row that year-over-year declines were only single digit.
The year-over-year decline back in January was 16.47%.
For months now, California markets have taken the cake with the largest inventory declines in the first part of 2013. However, they have been replaced by a new set of market leaders, including Detroit (-30.21%); Boston (-28.91%); Denver (-25.10%); Honolulu (-23.78%) and Naples, Fla. (-23.05%).
The shift in inventory decreases to other markets indicates the beginning of a housing market recovery process similar to what was observed in Florida in 2011 and in California in 2012 and 2013 for these new markets.
"The recovery is entering a new phase where inventory shortfalls are no longer the driving force behind changes in housing prices in many markets. Larger inventories, especially in the hotter markets that experienced rapid price increases in the spring, are expanding buyers' choices and helping to moderate price increases," said Steve Berkowitz, CEO of Move, Inc.
In July, the number of markets with drops in year-over-year inventory declined from 125 markets to 118 markets, an indicator that in the fall, some market inventories could potentially return to levels of a year ago and may continue to slow price appreciation in certain markets.
All but five markets are posting year-over-year declines in age of inventory and on a month-over-month basis. Nationwide, housing inventory is an estimated 17% lower than last year, but the national age of inventory rose 6.25% month-over-month.
"This month's report also underscores the uneven nature of the housing recovery and its dependence on the strength of the local economy,” he said.
Median listing prices are now negative year-over-year in only 31 markets, down from 36 in June.
According to Trulia (TRLA) Chief Economist Jed Kolko, much of California’s inventory rebound has to do with the appreciated home prices in many of the state’s markets.
“Prices have skyrocketed in much of California over the last year, and some homeowners are deciding to take advantage of these price increases and put their homes on the market,” Kolko told HousingWire.
Kolko added that, as a non-judicial state, most of California’s foreclosures are completed already, so California has already experienced its big inventory drop that happens after distressed homes hit the market and get sold.