The housing market is off to a rocky start in 2020, with the number of available homes for sale on the decline and prices rising.
Inventory in December declined 12 percent year over year – or by 155,000 listings, according to new data from Realtor.com. That's the largest year over year decline in almost three years.
The number of homes for sale hit the lowest level since January 2018.
The report noted that the housing crunch currently looks more severe than the last shortage in 2017 and “shows no signs of abatement.”
Exacerbating the problem? Volume of newly listed properties in December decreased by 11.2 percent since last year.
As a result, the median listing price rose 3 percent year over year, to $299,950.
Listed properties were also sitting on the market fewer days than normal, selling after 79 days, which is two days quicker than the same period last year.
For first-time buyers, the outlook might be even worse.
Inventory of properties priced under $200,000 was down 18.1 percent in December, while the number of available homes for sale priced between $200,000 and $750,000 declined 10.2 percent.
The metro areas with the steepest declines in inventory were San Jose, California (down 33 percent), Seattle (down 31.8 percent) and San Francisco (down 30.4 percent).
As previously reported by FOX Business, low inventory was expected to remain a challenge throughout 2020. In fact, according to a previous forecast from Realtor.com, the total number available homes for sale could potentially hit a record low – particularly in the first-time buyer’s market. Accordingly, overall U.S. sales were expected to fall by 1.8 percent.
Demand in the entry-level market will be driven by an uptick in Millennial activity – as those born between 1981 and 1997 are expected to account for more than 50 percent of all mortgages by springtime.
And the shortage of inventory will be aggravated by the behavior of Baby Boomers, who are expected to remain reluctant to sell in the coming year.
On the plus side, affordability is likely to remain a positive for prospective buyers. Mortgage rates are expected to remain low, while prices are not expected to rise significantly.