Housing Supply Rebounding?
Active inventory of homes grew for the first time since 2019, so what does this mean for the housing market? Realtor.com recently reported that the weekly inventory was up slightly year over year. The number is still rounded down to about 0%, but this is still a good sign with three straight years of declining inventory.
According to this chart, it shows approximately 409,000 active homes across the U.S. which is up from a low of 376,000 active homes that we had in February. We're still down approximately 70% over the past four years with still approximately two weeks worth of supply locally. This is much lower than a balanced market of four to six months worth of supply.
Average mortgage rates have risen from the 2%'s to approximately 5.5% which has pushed some buyers out of the market due to affordability. It's also caused an increase in supply in the upper price ranges. At 1:01 in the above video, the chart shows how there are more balanced markets in the $650,000+ range with three to five months worth of supply.
So if you're looking to sell a higher end home, be prepared for it to take longer or be prepared to price your home more aggressively. Higher interest rates are affecting affordability because borrowers are having to lower their budgets 30% or more to factor in these higher interest rates, which unfortunately is ultimately pricing out many of the first time homebuyers and forcing many buyers to purchase more smaller homes.
However, even with higher interest rates and many borrowers getting priced out, there's still far more demand than there is supply. Mortgage applications actually rose 5% last week from the week before, according to the Mortgage Bankers Association.
Posted by Matt Curtis on