If you happen to be tracking the current state of the housing market, then you know that a low number of newly built homes is a primary reason for the housing inventory shortage affecting today’s homebuyers. Another contributing factor? The amount of existing homes for sale has shrunk.
The good news is that the National Association of Realtors’ (NAR) latest Existing Home Sales Report shows that home sales are up 10.8 percent from this time last year. This is a boost big enough to exceed sellers’ expectations.
Homes are being sold, but inventory isn’t being replaced
The NAR report goes on to explain:
“Total housing inventory at the end of December totaled 1.40 million units, down 14.6 percent from November and 8.5 percent from one year ago. Unsold inventory sits at a 3.0-month supply at the current sales pace, down from the 3.7-month figure recorded in both November and December 2018. Unsold inventory totals have dropped for seven consecutive months from year-ago levels, taking a toll on home sales.”
Zillow also touched on the issue in a recent article:
“The number of for-sale homes in the U.S. is at its lowest point in at least seven years, and the shortage appears poised to get worse before it gets better.”
There’s no need to wait until spring to sell when buyers are already looking. Get prequalified first so you can move up to your dream home fast.
Calculated Risk’s Bill McBride went on to say:
“Inventory always decreases sharply in December as people take their homes off the market for the holidays. However, based on the data I’ve collected, this was the lowest level for inventory in at least three decades (the previous low was 1.43 million in December 1993).”
But why has housing inventory dropped so low? The housing market looked like it had softened.
This may have been the circumstance a year ago, but once again, the market turned. Skylar Olsen, Zillow’s Director of Economic Research, says:
“A year ago, a combination of a government shutdown, stock market slump, and mortgage rate spike caused a long-anticipated inventory rise. That supposed boom turned out to be a short-lived mirage as buyers came back into the market and more than erased the inventory gains. As a natural reaction, the recent slowdown in home values looks like it’s set to reverse back to accelerating growth right as we head into home shopping season with demand outpacing supply.”
If you own a home and are thinking about selling…
Now appears to be the time to do it. It’s been decades since competition, or the number of houses listed for sale, has been so low. Buyer demand is still high. To gain more attention and move your home off the market faster, list as soon as you are able. Both new construction and existing home inventory typically rise and crowd out sellers in the spring. Click here to find out more about selling and trading up to a brand-new place.
For educational purposes only. Please contact your qualified professional for specific guidance.
Sources deemed reliable but not guaranteed.