One of the leanest housing markets in history may be putting on some fat. The supply of homes for sale could increase in the next few weeks according to new data.
In April, inventory was 12% lower than in the same month last year, the smallest year-over-year decline since the end of 2019. Inventory was down 3% from a year ago in the last week of April.
If the trends we are seeing hold true, we could potentially see year-over-year inventory growth within the next few weeks.
The recent increase in mortgage rates is likely to be the reason for the shift in supply. Since the beginning of the year, the average rate on the 30-year fixed has increased.
The number of new listings was down in April compared with a year ago, and the number of active listings is still down from pre-pandemic levels. Mid-sized family homes are leading the growth in supply, as fewer are going under contract during the spring market, a popular time for families to shop for houses.
Record high home prices and higher mortgage rates have left much of the competition out in the cold. Home prices have increased since the beginning of the Pandemic. The monthly mortgage payment on a $400,000 home with a 20% down payment is now $467 more than it was in March 2020.
There are fewer potential buyers and there are less bidding wars.
Legere said that the lender he works for says one in four potential mortgage borrowers have been knocked out of the market.
Legere said that the 25% reduction in buyers gets us to some sort of reasonableness, but it is still tough for less-than-strong buyers. The million-dollar market is still young.
The previous record low of 36 days was set in June 2021, but the average home spent just 34 days on the market, six days less than a year ago. In the following markets, homes sold at the fastest year-over-year pace: Miami, St. Louis, Raleigh, and Hartford.
The Boston area is not one of the fastest- moving markets, but offers are still strong, even in the luxury sector.
Prices haven't cooled yet, but some sellers have unrealistic expectations. Some hard conversations are being had prior to listing to set expectations with sellers.
The key to inventory growth will be fewer buyers and more sellers. Black Knight, a mortgage technology and data provider, has found that homes are less affordable in 95 percent of U.S. housing markets compared with their historical averages.
A survey by Gallup found that 70% of Americans think it's a bad time to buy a home. The polling organization began asking the question in 1978.
The next eight or so weeks will be crucial for buyers and sellers.
All Rights Reserved © 2024
