The U.S. housing market, entering its busiest season, is tipped so far in favor of sellers that almost a third of listings in areas from Washington, D.C., to Denver and Seattle are under contract in two weeks or less.
One home in Washington attracted 168 offers in December and sold for almost twice the asking price. About 70 people lined up last month for a lottery to select buyers for four available houses in a San Ramon, Calif., subdivision where, in August, bidders camped for weeks to secure purchases.
A plunge in U.S. home listings to a 12-year low is driving up prices and preventing transactions from returning to historically normal levels. Many potential sellers are holding off until values rise more, while investors are snatching up distressed properties before they reach the market. Builders, reporting their best orders in years, can’t increase production fast enough. As buyers seek to take advantage of record-low mortgage rates, the supply and demand imbalance threatens to further limit deals as the key spring selling season approaches.
“There is just no inventory for buyers," said Bob Cilk, an agent with Re/Max Accord in Pleasanton, Calif., where only 27 single-family houses are available, about a third of the normal level.
While rising values eventually will compel would-be sellers to list their homes, inventories may remain tight for a year or two because prices need to rise another five or 10 percent before enough sellers can cover mortgage and transaction costs, said Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester, Penn.