Diane Ollick with CNBC recently wrote that industry experts are seeing another inventory shortage on the horizon.
The number of for-sale listings, though up +2.8% annually in June 2019, was down slightly from May’s listings.
This downward trend in housing supplies began in January of this year. Supply growth was up +6.4% in January and then fell to +5.8% in February. During this Spring, diminishing supply continued and now experts expect this downward cycle to flatten into the remaining summer months.
According to realtor.com, a decline in housing supply could hit in October of this year. Danielle Hale, chief economist with realtor.com, said, “It was only 18 months ago that the number of homes for sale hit its lowest level in recorded history…and that lowest level sparked the fiercest competition among buyers we have ever seen. If this trend we’re seeing now continues, overall inventory could hit near record lows by early next year…so far, there has been a lackluster response to low interest rates, but if they do spark fresh buyer interest later in this year, US (housing) inventory could set new record lows this winter.”
Why are fewer homeowners listing their homes now?
- Recently reduced consumer confidence
- Older people hanging on to their homes to “age in place”
- Despite low mortgage interest rates now that could soon become even lower, many homeowners refinanced their rates at even lower rates. This translates into potential sellers having to pay more for a comparative mortgage as well as having to pay more for a move-up house due to continually increasing home prices.
Redfin research corroborates realtor.com’s Hale’s above statement. Redfin found that in June of this year, inventories fell in the 46 major markets that it tracks for the first time since last September. Memphis, Pittsburgh and Oklahoma City were among those 46 markets showing double-digit inventory declines.
Redfin’s chief economist, Daryl Fairweather, said, “Lower interest rates are bringing buyers back (into the market) but without enough homes for sale to meet the demand, we expect to see more bidding wars that will push prices up…we expect small, inland markets where a typical house is still affordable for a middle-class family to heat up the most.”