How Low Inventory May Impact the Housing Market This Fall

Dated: September 20 2020

Views: 136

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.

Blog author image

KELLY RICKARD

I am a native Texan and real estate agent for Abby Realty in Spring, TX. I was born and raised in the Houston area; therefore, I know the city and surrounding areas well. Whether you are buying, sell....

Latest Blog Posts

Options for First-Time Homebuyers [INFOGRAPHIC]

Options for First-Time Homebuyers [INFOGRAPHIC]Some HighlightsWith a housing market this competitive, sometimes you have to think outside the box.Work with your trusted real estate advisors to

Read More

Are More Young People Are Buying Homes?

More Young People Are Buying HomesThere’s a common misconception that younger generations aren’t interested in homeownership. Many people point to the fact that millennials put off

Read More

What Does it Mean to be in a Sellers’ Market?

What Does Being in a Sellers’ Market Mean?Whether or not you’ve been following the real estate industry lately, there’s a good chance you’ve heard we’re in a serious

Read More

Real Estate: It is Still a Lack of Supply, Not a Lack of Demand

Real Estate: It’s Still a Lack of Supply, Not a Lack of DemandOne of the major questions real estate experts are asking today is whether prospective homebuyers still believe purchasing a home

Read More