How Low Inventory May Impact the Housing Market This Fall

How Low Inventory May Impact the Housing Market This Fall

How Low Inventory May Impact the Housing Market This Fall | MyKCM

 

Real estate continues to be called the ‘bright spot’ in the current economy, but there’s one thing that may hold the housing market back from achieving its full potential this year: the lack of homes for sale.

Buyers are actively searching for and purchasing homes, looking to capitalize on today’s historically low interest rates, but there just aren’t enough houses for sale to meet that growing need. Sam Khater, Chief Economist at Freddie Mac, explains:

Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery…These low rates have ignited robust purchase demand activity…However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity.”

According to the National Association of Realtors (NAR), right now, unsold inventory sits at a 3.1-month supply at the current sales pace. To have a balanced market where there are enough homes for sale to meet buyer demand, the market needs inventory for 6 months. Today, we’re nowhere near where that number needs to be. If the trend continues, it will get even harder to find homes to purchase this fall, and that may slow down potential buyers. Danielle Hale, Chief Economist at realtor.comnotes:

“The overall lack of sustained new listings growth could put a dent in fall home sales despite high interest from home shoppers, because new listings are key to home sales.”

The realtor.com Weekly Recovery Report keeps an eye on the number of listings coming into the market (houses available for sale) and the total number of listings staying in the market compared to the previous year (See graph below):How Low Inventory May Impact the Housing Market This Fall | MyKCMBuyers are clearly scooping up homes faster than they’re being put up for sale. The number of total listings (the orange line) continues to decline even as new listings (the blue line) are coming to the market. Why? Javier Vivas, Director of Economic Research at realtor.comnotes:

“The post-pandemic period has brought a record number of homebuyers back into the market, but it’s also failed to bring a consistent number of sellers back. Homes are selling faster, and sales are still on an upward trend, but rapidly disappearing inventory also means more home shoppers are being priced out. If we don’t see material improvement to supply in the next few weeks, we could see the number of transactions begin to dwindle again even as the lineup of buyers continues to grow.”

Does this mean it’s a good time to sell?

Yes. If you’re thinking about selling your house, this fall is a great time to make it happen. There are plenty of buyers looking for homes to purchase because they want to take advantage of low interest rates. Realtors are also reporting an average of 3 offers per house and an increase in bidding wars, meaning the demand is there and the opportunity to sell for the most favorable terms is in your favor as a seller.

Bottom Line

If you’re considering selling your house, this is the perfect time to connect so we can talk about how you can benefit from the market trends in our local area.

 

 

About the Author
Joshua Stephens is the founder and president of Moving Greater Boston and a Vice President of Berkshire Hathaway Home Services Warren Residential. After graduating from UMASS Amherst with a degree in psychology in 2008, Josh dedicated five years to social service work on the North Shore before joining Berkshire Hathaway in 2013, where he found his professional calling and quickly distinguished himself as a motivated innovator capable of synthesizing the needs of buyers, sellers, investors, and developers. In just a few short years, Josh formed Moving Greater Boston and achieved over $100 million in sales after only 7 years in the business. Josh's team has been consistently recognized at both the local and national levels, receiving numerous prestigious awards for sales and customer service. Last year, the Moving Greater Boston team was awarded the coveted Chairman’s Circle Platinum award for all of Berkshire Hathaway Home Services, which recognizes agents and teams that are in the top 1% for sales across a network of over 70,000 agencies. In 2017, Josh was also personally selected to serve on the Berkshire Hathaway Home Services National REthink Council, an honor bestowed upon only 15 agents among thousands of applicants. Despite his many and ongoing successes in the world of real estate, Joshua has never lost sight of his social work roots. A compassionate and principled professional who knows the value of strong communities, Josh continues his advocacy outside of the office by being actively involved in a number of local organizations and charities. In 2016, he was instrumental in conceptualizing and developing Business Networking International (BNI) Prospect Hill, an organization that connects local business professionals and aspiring entrepreneurs. As a native of Massachusetts, Joshua has an intimate knowledge of Boston real estate, while having a degree in psychology helps him to understand each of his clients' unique needs, enabling him to connect them with ideal communities, an opportunity which he considers both a priority and privilege. Rather than simply facilitating the buying and selling of property, Josh views his role as a realtor as a lifelong commitment to continually serving the best interests of the people who have put their trust in him. Josh continually strives for excellence in service, provides in-depth knowledge of the market, and blends unwavering integrity with amenable good humor to alleviate the stress of real estate transactions and assure the experience is one that lets the sensation of being in the perfect place, at the perfect time, truly resonate.