Despite increase, inventory levels are still well below where they were five years ago.

After nearly four years of annual declines in inventory, the number of homes for sale has now increased year-over-year for three straight months. That’s a bit of good news for home shoppers who face less competition as homes stay on the market for longer. But inventory levels are still well below where they were five years ago, and small increases have yet to meaningfully reverse those deficits, according to the November Zillow Real Estate Market Report. A year ago, inventory fell 9.1 percent on an annual basis. Some of the markets that were among the hottest in the country are seeing the biggest increases in available homes, but these are also the places where restricted inventory created more competition for potential buyers.

“After years of intense inventory shortages and cutthroat competition, any gains in inventory should be embraced by homebuyers. Unfortunately, the small recent gains are not nearly enough to fully erase the existing deficit, nor are they evenly distributed -- as there are roughly twice as many homes available for sale in the higher reaches of the market than there are at the lower, more competitive end,” said Aaron Terrazas, senior economist at Zillow. “Rather than calling this a true inventory recovery, it’s probably more accurate to say that inventory levels are no longer in a free fall and are currently bumping along the bottom.” The typical U.S. home is worth $222,800, up 7.7 percent year-over-year.

Source: Zillow