Welcome to our latest real estate market update, where we share you with crucial insights that illuminate the dynamic landscape of the real estate market. In a world of constant change, staying informed is key to making the right decisions. Let’s delve into the present condition of the market and uncover valuable trends that can guide your choices.
Half the Inventory, Double the Demand
The current housing market is experiencing an inventory shortage like never before. The number of houses for sale is only half of what would typically be available in a more normal year. This scarcity is driving increased demand for homes on the market.
Calculated Risk reports the disparity between current inventory levels and those of previous years. Compared to the same period last year, housing supply is down by approximately 10%, even though it was already considered limited at that time. Looking further back, the reduction in inventory is even more pronounced. While we’re still nowhere near what’s considered a balanced market, there’s plenty of demand for houses because there just aren’t enough homes to go around. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), explains:
“There are simply not enough homes for sale. The market can easily absorb a doubling of inventory.”
Summer Landscape: Rising Rates Yet Resilient Buyers
With increasing home prices and limited inventory, the pace of home sales is undergoing adaptation. Homes are now spending an additional eight days on the market, showing the influence of these factors. Interestingly, despite these challenges, the data reflects a determined interest among buyers. This slower pace may be a precursor to a new equilibrium, where homes spend fewer days on the market than during the peak frenzy. Danielle Hale, chief economist for Realtor.com®, states:
“As we lap the 2022 housing slowdown period, this gap is likely to continue to shrink, and by fall we could even see homes selling faster than one year ago. If this happens, it could indicate that the market is finding a new normal, where homes sit on the market for fewer days than pre-pandemic, but longer than was common during the height of the real estate frenzy.”
Waiting Might Not Be Your Best Option for Homesellers
While predictions indicate a gradual decline in mortgage rates as inflation subsides, waiting might not be the optimal choice. Mortgage rates are inherently unpredictable. Concurrently, home prices are once again on an upward trajectory. By making a move now, you can avoid the risk of rising home prices for your next purchase. Moreover, if rates do indeed decrease, refinancing remains a possibility. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), states:
“Inventory will remain tight in the coming months and even for the next couple of years. Some homeowners are unwilling to trade up or trade down after locking in historically-low mortgage rates in recent years.”
Sources: Keeping Current Matters, Realtor.com, Fannie Mae & Calculated Risk
