You probably already know about the ongoing supply shortage within the U.S. housing market. This has been one of the biggest real estate news stories of the past year, and for good reason.
What you might not know is that inventory is still declining in many cities and metro areas, as we advance into 2022. In fact, a recent report showed that housing markets like San Jose, Miami, Orlando, Raleigh and Seattle have experienced major inventory declines over the past year.
Real Estate Supply Shortage Continues in 2022
Earlier this month, researchers from Realtor.com published a housing market update with data for the nation’s 50 largest metro areas.
Among other things, their report showed that real estate inventory continues to decline across much of the U.S. This trend started in 2021, as home-buying activity surged nationwide, and it has followed us into 2022.
In fact, tight supply conditions could influence the 2022 real estate market more than any other single factor. Home buyers in many U.S. cities will find themselves competing for scant inventory.
To quote the January 2022 Realtor.com report:
“With buyers still quickly snatching up active listings and fewer new sellers entering the market, the inventory gap from last year continues to widen. December marked the third straight month of bigger annual declines in the U.S. supply of active listings…”
In other words, it’s still hard to find a house to buy in much of the country. And that probably won’t change any time soon.
11 Housing Markets With Big Inventory Declines
Of course, real estate conditions can vary greatly from one local housing market to the next. Some major metro areas have experienced a much bigger decline in inventory, when compared to the rest of the country. Real estate markets in Hartford, Connecticut; San Jose, California; and Miami and Orlando, Florida top that list.
The table below shows 11 metro areas where for-sale inventory levels have fallen the most. The “Active Listings” column shows the year-over-year change (decline) in the number of active real estate listings on Realtor.com. The column on the right shows the decline in newly added listings.
| Metro Area | Active Listings YoY | New Listings YoY |
| Hartford-West Hartford-East Hartford, Conn. | -62.10% | -26.60% |
| San Jose-Sunnyvale-Santa Clara, Calif. | -55.60% | -22.90% |
| Miami-Fort Lauderdale-West Palm Beach, Fla. | -53.10% | -18.80% |
| Orlando-Kissimmee-Sanford, Fla. | -51.40% | -8.90% |
| Raleigh, N.C. | -50.10% | -24.10% |
| Seattle-Tacoma-Bellevue, Wash. | -47.20% | -10.70% |
| Nashville-Davidson–Murfreesboro–Franklin, Tenn. | -46.00% | -23.40% |
| Tampa-St. Petersburg-Clearwater, Fla. | -42.80% | -7.90% |
| San Diego-Carlsbad, Calif. | -42.30% | -12.30% |
| San Francisco-Oakland-Hayward, Calif. | -41.00% | -27.60% |
| Los Angeles-Long Beach-Anaheim, Calif. | -40.00% | -18.50% |
Housing markets like Hartford, San Jose, Miami, Orlando and Raleigh all experienced at least a 50% reduction in active real estate listings over the past year or so. (That’s when measured from December 2020 to December 2021.)
Likewise, housing markets in Seattle, Nashville, Tampa, San Diego, San Francisco and Los Angeles had at least a 40% decline in listings, year over year.
These metro areas also experienced a decline in the number of new listings, which means the supply shortage isn’t getting any better.
Home Prices Rising Steadily in These Metros
Rising prices is another thing these real estate markets have in common. Supply shortages, combined with steady demand from buyers, have sent home prices soaring over the past year. And additional gains are expected during 2022.
According to the latest data from Zillow, all 11 of these housing markets posted double-digit home price gains over the past year alone. In Raleigh, North Carolina and Tampa, Florida, house values rose by nearly 30% in the past 12 months. According to one report, the Tampa and Raleigh real estate markets could be among the nation’s hottest in 2022.
You don’t have to be a professional housing analyst or economist to see the connection here. When supply levels fall, buyers find themselves competing for a smaller and smaller pool of homes. They often find themselves trying to outbid one another, or even making offers above the seller’s asking price.
This is what’s boosting home prices in real estate markets like Miami, Nashville, Raleigh, Tampa, and the other metros listed above. And we’ll probably see more of it through 2022 and possibly into 2023. As you can see from the “new listings” column above, inventory levels continue to fall in highly competitive housing markets like Hartford, Nashville, San Francisco and San Jose.
Another Year of ‘Seller’s Market’ Conditions?
There’s been a lot of talk lately about the U.S. real estate market “cooling” or slowing down in 2022.
And there’s some truth to this. In fact, we just witnessed a recent decline in home sales. According to a January 27 report from the National Association of REALTORS: “Pending home sales fell in December, denoting two straight months of declines.”
Higher home prices have something to do with this. As prices continue to climb, fewer and fewer buyers can afford to make a purchase. That reduces demand, especially among first-time buyers with smaller budgets. Rising mortgage rates could also chill the housing market in 2022.
But we have to keep some perspective here. If the market cools from white-hot to “just” red-hot, it will remain highly competitive. And it will probably continue to favor sellers over buyers for the foreseeable future.