FLASH: Buyers in the tightest US housing markets got what they have been waiting for, inventory, but instead of sales rising as a result, they are falling.
In Salt Lake City, where listings rose 53% in March from a year earlier, transactions fell 21%, the biggest decliner in the country, according to a report from brokerage Redfin Corp. And that was followed by Los Angeles, Las Vegas and Orange County, California, all previously Hot markets where inventory has been rising.
Blame affordability in here
Buyers in urban areas in the western US stepped back last year after a rise in mortgage rates made it more expensive to purchase homes that were already costly.
President Trump’s tax plan augurs hope that lower borrowing costs this year may already be helping.
“Buyers are back, but they are picky,” said the Chief economist of Redfin. “In order to get back to a balanced market, prices have to come down more.”
Demand in markets such as Orange County went from “good to horrible” late last year, said the director of research at John Burns Real Estate Consulting LLC, which tracks home construction. In Q-4 of Y 2018, sales of new homes in the area were the weakest since the Great Recession, he said.
Recently, buyers have started to return.
“We are starting to hear that sales are picking up in Orange County and the Pacific Northwest,” he said. “The caveat is that builders are having to cut prices and meet the market to generate those sales. They need another month or two of steady sales momentum before they feel comfortable raising prices again.”