The U.S. housing market is suffering from its lowest supply in history, and that is taking an increasingly hard toll on sales.
Pending home sales, a measure of signed contracts on existing homes, fell a wider-than-expected 10.6% in February compared with January, according to the National Association of Realtors. Sales were 0.5% lower year over year.
“The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift,” said the Realtor’s chief economist, Lawrence Yun. “But contracts are not clicking due to record-low inventory.”
There were just 1.03 million homes for sale at the end of February, a 29.5% drop compared with February 2020. That is the largest annual decline ever and the lowest supply on record.
Sales are now varying dramatically by price point because supply is so lean on the low end and more plentiful on the higher end.
Homes priced above $250,000 have seen the most active sales, but Yun notes that homes priced above $500,000 to less than $1 million are starting to see the same low inventory problems.