For-sale inventories across the nation increased from a 2.8-month supply in June 2018 to a +3.3% supply in June 2019, according to CoreLogic. Couple this inventory rise with the 15th consecutive month of a sales and price cool-down throughout the market and it’s not difficult to correlate the cause and effect of consumer concerns and behavior.
Why haven’t low mortgage interest rates had a positive impact on sales that would deflate inventories? Mortgage interest rates are not singular factors in homebuyers’ decision making…home prices, down payment amounts and life cycle events such as marriage, children, divorce and retirement combined with interest rates affect home buying decision-making. And secondly, falling mortgage interest rates have mostly benefitted homeowners who purchased their homes in the past nine months and before and applied for refinancing. Makes sense, doesn’t it, if one can reduce their monthly mortgage interest rates by some 100-150 basis points?
Check out the differences in inventory supplies at the various price points within the market:
- Low price tier saw a +3.5 month supply in June 2019, approximately 1/3 the inventory peak of January 2008.
- Low-middle price tier had a +2.6-month supply, approximately 1/5 of its January 2009 peak.
- Middle-moderate price tier saw a +2.8-month supply, also 1/5 of its January 2009 peak.
- High price tier saw a +3.9-month supply in June 2019. Approximately ½ of its March 2009 peak.
CoreLogic tells us that nationally, inventory increased +7.5% YOY in June 2019 with a +3.3-month supply. In CoreLogic’s 20-City Composite areas, 18 metros showed increases in their respective supplies. Miami showed the largest supply increase from 7.7-months in June 2018 to 9.8-month supplies in June 2019. Only Tulsa and San Diego had larger supplies last year.