The housing market continued to limp along in February. Last month inventory was again lower than expected for this time of the year, and home prices continued to rise in response. As with 2012 and January, the real estate market is trending toward sellers.
According to our analysis, in 29 of 34 major cities we track, inventory has dropped on a year-over-year basis. At the same time the median price per square for a home has increased.
The unfortunate news is inventory dropped on a month-over-month basis, as well. Typically, the number of homes for sale increases at the beginning of the year and continues to rise as sellers prepare for the spring buying season.
At the end of February there were 92,416 homes on the market, according to the Multiple Listing Services we track. This was a slight decrease over the previous month when there were 92,833 homes on the market. The amount of inventory across the geographically diverse cities we cover is lower than at any other point in the past three years.
Inventory experienced a year-over-year decrease of 20.2 percent. In February 2012 there were 115,757 homes available. In 2011, there were 160,921 on the market, while in February 2010 there were a total of 143,119 homes for sale.
On a state level, California saw the largest decrease in inventory. The total number of homes for sale in California dropped by 57 percent compared to the same time last year.
Of the cities we track, the three areas with the greatest decrease in inventory were in the Golden State. San Francisco, Oakland, and Sacramento saw significant drops in inventory. Our city data showed:
- San Francisco: The City by the Bay saw a decrease of 58.9 percent in homes for sale in the past year. In 2012, there were 1,051 homes for sale in San Francisco. Today there are 432 homes on the market.
- Oakland: O-Town witnessed a 62 percent decrease in homes on the market. In 2012 there were 874 homes for sale in Oakland. Now there are 332 homes on the market.
- Sacramento: Sacramento saw the largest decrease across the cities we track. Sac-Town’s inventory dropped by 72.9 percent compared to last year. Twelve months ago there were 2,989 homes for sale in Sacramento. Today there are 811 homes on the market.
While the drop in inventory is disheartening for home buyers, there was a bright spot in our analysis. Baltimore saw a 24 percent increase in inventory. In 2012, there were 3,644 homes for sale in Baltimore. Today there are 4,629 homes on the market.
Price per Square Foot
The second major piece of real estate news in February was the increase in price per square foot. This is a result of fewer homes on the market and increased competition among buyers. Our analysis showed that 24 of the 34 cities we track saw increases in price per square foot.
The result has been a net 12.4 percent jump in prices across all cities we track.
In the past 12 months, the median price per square foot index increased from $155 to $174. For comparison, in 2011 the price per square foot index was $157, while in 2010 the price point stood at $174.
The cities that saw the greatest increase in price per square foot were Sacramento, Phoenix, and Oakland. You’ll notice that two of these cities also saw large decreases in the total amount of housing inventory.
Here is how these three cities changed:
- Sacramento: The price per square foot for a home in Sacramento increased by 47.2 percent compared to last year. In February 2012, the price per square foot for a home in Sacramento was $89. Today a home cost $131 per square foot.
- Phoenix: In the past 12 months the price per square foot for a home in Phoenix increased by 34.2 percent. During this time last year a home in the area cost $79 per square foot, while today a Phoenix home costs $106 per square foot.
- Oakland: The home of the Raiders saw an increase of 33.8 percent. In February 2012 the price per square foot for a home in Oakland was $198. The current figure is $265.
If you are a home buyer looking for a less expensive option, our analysis showed that Cleveland was the least expensive city to purchase a home. A home in Cleveland cost $46 per square foot, a decrease of 6.1 percent compared to last year. In 2012, a home in Cleveland cost $49 per square foot.
For comparison a 1,000 square foot home in Cleveland would cost $46,000, while a similar home in Sacramento would cost $131,000.
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