The big jump in home prices in the past year is finally bringing more sellers to the housing market, but inventories remain lean.
The number of existing homes for sale ticked up to 2.2 million in May, up 3.3% from April, the National Association of Realtors said Thursday.
When adjusted for seasonal factors, inventory has risen for four months in a row, suggesting the supply bottom came in January, says Jed Kolko, economist for real estate website Trulia.
The new sellers are making moves they've put off for years as home prices tanked. They're taking jobs in other locations, enjoying fast sales of existing homes. And some are pricing properties at levels higher than Realtors think prudent — and getting their price anyway.
The new sellers hardly constitute a flood, more like a trickle from a huge lake. They still are far too few for the balance of power in many markets to shift from sellers to buyers, says Budge Huskey, CEO of Coldwell Banker. But with home prices up 12% in April from a year ago, more are expected if prices continue to rise.
"There is huge pent-up seller demand," Huskey says. "Every Realtor knows a seller who'd like to move to the next chapter in their life."
Martha Gove and Josh Cohen are doing just that.
They're moving just three blocks from their current home in Ann Arbor, Mich., to a bigger home they just bought.
The couple were "waiting and watching" for three years to find a suitable home for sale. In recent months, "things finally started to loosen up," says Gove, 40, a lawyer.
In May, Ann Arbor posted an 11% jump in homes listed for sale from April, Realtor.com says — almost twice as much as the national average. And its May asking prices tracked by Realtor.com were up 17% from a year earlier.
Ann Arbor's market is so strong that the couple are attempting to sell their home themselves. That's not something they would have attempted even six months ago, Gove says.
In the first week after listing their home, they had six showings. "People are suddenly on the move," Gove says.
In May, existing home sales nationwide were up a robust 4.2% from April and almost 13% from a year ago, NAR says.
SUPPLY IMPROVING BUT STILL TIGHT
The shift in supply is broad-based.
Earlier this month, the number of homes listed for sale on real estate website Zillow was down 12.2% year-over-year. That's still better than in January, when listings were down almost 18% year-over-year.
Realtor.com, which tracks listings in 146 markets nationwide, shows listings up 5.8% in May from April.
But in 18 of the markets, including Los Angeles, Orlando and Seattle, inventory was up 10% or more in May from April.
In the California cities of Stockton and Sacramento, May listings were up more than 35% from April. Both cities posted 22% price gains in April from a year earlier, market researcher CoreLogic says.
Rising home prices are likely driving the increase, Kolko says.
"Every day as prices rise, more people get back above water," Kolko says. That makes selling easier.
Nationwide, 9.7 million, or almost 20% of homeowners with a mortgage, owed more on their homes than they were worth as of March, CoreLogic says. That's down from 12.1 million at the end of 2011, just as home price gains were kicking off in many markets after a roughly 30% national drop.
"Sellers have finally noticed that they have some equity," says Coldwell Banker agent Ramon Macias in San Diego. Prices there were up 17% in April year-over-year, CoreLogic says.
Gonzalo and Grace Hernandez never worried about whether they'd get back what they paid for their San Diego home.
That's because they bought it just 11 months ago when prices were starting to move off their bottom. They're now selling it to relocate to Nashville for a job change.
They paid $355,000 for the home and now have it under contract to sell for $420,000. It took a week to sell.
Nationwide, the median time on market for all homes that sold in May was just 41 days. That's down from 72 days a year ago, NAR says.
Knowing that they'd turn a solid profit was a "big part of the decision" to accept a job transfer with his hotel chain employer, says Gonzalo Hernandez, 40.
Some sellers are getting prices that surprise even their Realtors, given tight supplies for sale in some markets and frequent multiple-offer situations.
Redfin agent Bree Al-Rashid recently handled the sale of a home in a popular Seattle neighborhood that sold for 10% more than she thought it was worth, based on comparable sales. The sellers were adamant that the listing price be higher than what she recommended, Al-Rashid says.
"I've been humbled in this market. We cannot predict what can happen," Al-Rashid says. Seattle prices were up 16% in April from a year ago.
The supply of existing homes for sale in May was at 5.1 months, down from 5.2 months in April. But the supply was just 4.3 months in January, NAR data show.
That means that all homes would sell in that time frame if no more supply came on the market and sales continued at May's pace. Generally, Realtors consider a six-month supply to be a balanced market between buyers and sellers.
It will be next year before the supply of existing homes for sale climbs to a six- or seven-month level, says Lawrence Yun, NAR chief economist.
One big factor is how fast home builders ramp up construction, which will increase the overall supply of homes for sale.
In the meantime, sellers still have big advantages in many markets, especially in the West where inventory tends to be tighter.
In California, May's data show just a 2.6-month supply of single-family homes for sale — leaving that market firmly in the sellers' camp after years of rampant foreclosures and big price drops.
"It's amazing how quickly the dynamics have changed from a buyer's market to a seller's market," Huskey says.