The number of homes for sale dropped in the U.S. last month, led by shrinking inventories in California from San Francisco to San Diego, as buyers returned to one of the country’s worst-hit housing markets.
There were 1.88 million single-family houses, condos, townhomes and co-ops on the market nationwide in June, down 19 percent from a year earlier, according to the National Association of Realtors’ website. Seven of the 10 metropolitan areas with the biggest inventory reductions were in California, Realtor.com said in a study released today.
The shrinking inventory is an indication that the U.S. residential real estate market has “bottomed out,” said Lawrence Yun, chief economist for the Chicago-based association. The number of homes for sale plummeted throughout California, where prices plunged and foreclosures soared during and after the U.S. recession. Transactions and values are beginning to recover in the most populous state.
“The markets that underwent the biggest pain after the bubble, these are the markets that are showing the fastest price recovery,” Yun said in a telephone interview from Washington. “Buyers recognize that prices over-corrected — a great bargain opportunity.”
Home prices fell in April at the slowest pace in more than a year, the S&P/Case-Shiller index of property values in 20 U.S. cities showed last month. The median age of the inventory of for-sale listings fell 9.7 percent in June from a year earlier to 84 days, according to Realtor.com, which is operated by Campbell, California-based Move Inc. (MOVE) Median list prices, boosted by tight supplies, gained 2.7 percent to $195,000.
Rising prices traditionally encourage sellers to enter the market, adding inventory and stabilizing prices, said Julie Reynolds, a vice president at Realtor.com. “We haven’t seen that,” she said in an interview. “We continue to see inventory levels drop.”
Some of the biggest declines in inventories were in regions where homeowners owe more on their properties than they’re worth following a drop in prices, which makes selling difficult, Realtor.com said. In California, the portion of mortgaged homes with negative equity rose to 30.5 percent in the first quarter from 29.9 percent in the previous three months.
Home inventories in 10 California metropolitan areas, including San Jose, Riverside and Sacramento, fell at least 33 percent from a year earlier, according to the report. The biggest decline was in Oakland, where the supply dropped 58 percent, Realtor.com said.
Nationwide, “the decline in inventory is a sure sign that prices will strengthen over time — and in one sense the price recovery is very good for the U.S. economy,” Yun said. “The wealth effect of housing will be a significant indicator of economic growth.”