Housing supply is 'critically low' going into spring, usually the hot selling season

As daffodils come into bloom and the vernal equinox arrives, the real estate market is supposed to follow suit with new listings, open houses and a frenzy of buying activity.

"This typically is the time when the spring market begins," says real estate agent Christine Dupuis. "I do think there will be more inventory in the spring, but not like we saw three or four years ago."

Normally in March, real estate agents are slammed with people looking to sell and looking to buy, she said.

The number of single-family homes listed in Rhode Island is "critically low," with 864 listed in February, according to data and a news release from the Rhode Island Association of Realtors.

Buying your first home in RI? The state may give you $17,500 for your down payment

Historical data from the association shows that in February 2019, 2,769 homes were listed for sale.

Looking at newly released data from February, the lack of inventory is especially hitting the "starter home" sector, with just a quarter of homes listed for less than the median selling price in February, $384,000. In February 2019, the median price was $250,000. That same price point now buys a starter home, often a house where major repairs are needed.

BHHS Pinnacle Realty agent Maria Garcia said usually in March, the listings start pouring in, but that isn't happening this year.

"There's nothing out there, and what is out there, it's $575,000, $600,000 – all of it's over $500,000, and whatever's left under $400,000 needs a lot of work or something else is wrong," she said.

The median selling price of $384,000 was down slightly from January's $391,000, but up 40% compared to before the onset of the pandemic.

Rhode Island Association of Realtors President Bryant Da Cruz wrote in the news release that the median selling price remains high because larger, more expensive houses are being listed.

"Prospective buyers trying to break into the market for the first time are facing an uphill battle with few choices and interest rates higher than we’ve seen in several years," he wrote in the release.

While the number of houses listed is down, so too are the numbers of houses sold in February, 392, and the number of pending sales, 880.

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"Just like anything in life, it's all about timing," Dupuis said. "There's definitely some inventory, but I have noticed what little bit more there's been this week are going very quickly."

While there may be few listings, the average single-family home stayed on the market for 40 days, much longer than the 23 to 29 days houses spent on the market during the homebuying frenzy in 2022, when interest rates sank to historic lows.

"Sellers still need to be pricing it right," Dupuis said. "You don't want to overprice, as those properties are sitting on the market."

While prices are still high, buyers are also getting squeezed by rising mortgage rates. While mortgage rates are lower than they were in the 1980s, at 6.6% for a 30-year fixed rate mortgage, that's the highest they've been in 15 years.

Prices for condos continue to drop

The median sale price of a condo has continued to drop, hitting $308,000, well below the high of $344,000 in September 2022.

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The number of condo listings is still half of what it was pre-pandemic, 238 compared to 731 in February 2019.

Multi-family houses hold steady

The median selling price for a multi-family house has maintained a steady $450,000, while the number of listings, 147, is small compared to the pre-pandemic level of 426 in February 2019.

In February, 71 multi-family properties were sold, compared with 150 in February 2022 and 156 in February 2021.

Rhode Island giving $17,500 grants for first-time home buyers

First-time homebuyers who meet certain income limits could get help with their down payment and closing costs with a $17,500 grant from the state, being administered by Rhode Island Housing.

Read more about the program here.

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Reach reporter Wheeler Cowperthwaite at wcowperthwaite@providencejournal.com or follow him on Twitter @WheelerReporter.

This article originally appeared on The Providence Journal: What February's housing numbers say about Rhode Island real estate