Scant housing inventory may finally be gaining a bit of weight.
Smallest Monthly Decline in Housing Supply since End of 2019
New data from Realtor.com indicates that housing inventory was down only -12% y/y in April, the smallest year-over-year drop since the end of 2019. This barely perceivable shift in inventory during April was likely due to slower, more sluggish home sales because of rapidly increasing mortgage rates that made every for-sale home more expensive.
Another reading of data from Realtor.com indicated that for just the last week of April, inventory supplies were down just -3% compared with one year ago.
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Danielle Hale, Chief Economist with Realtor.com, said, “April data suggests a positive turn of events is on the horizon for weary buyers: If the trends we’re seeing now hold true, we could potentially see year-over-year inventory growth within the next few weeks.”
Higher Rates = Fewer Potential Buyers
Many potential homebuyers have been sidelined by high home prices and climbing mortgage rates.
According to Realtor.com, home prices have increased approximately +34% since the onslaught of the COVID pandemic. The typical monthly mortgage payment on a $400,000 home with a 20% down payment is now +$467/month more than it was in March 2020.
Key to Inventory Growth = Fewer Buyers + More Sellers
Paul Legere, a buyer’s agent with Joel Nelson Group in Washington DC, told CNBC that the lender with whom he works said that one in four potential mortgage borrowers has been knocked out of the market by higher mortgage rates.
25% fewer potential buyers are a substantial chunk of potential buyers being sidelined by quickly rising homeownership costs.
That said, according to Dana Bull, an agent with Sotheby’s International Realty,“…inventory is on the rise…as sellers want to capitalize on peak demand…(and) buyers are still coming out of the woodwork and committed to landing homes, so new inventory and new demand seem to be increasing in lockstep.”
Bull added, “The next eight of so weeks are going to be crucial for buyers and sellers as this is crunch time.”
Active Listings Remain Down Compared with Pre-Pandemic Levels
Let’s not lose our heads with this softly lit inventory shift, however. The number of active listings still remains down -67% compared with pre-pandemic levels.
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Thanks to CNBC.