If you’re searching for a home right now, it’s important to understand a little bit about the current supply of homes available for sale. Here’s a look at two reasons why today’s housing inventory is low and some promising news as you move forward with your search.
1. New Home Construction Fell Behind for Several Years
The graph below shows new home construction for single-family homes over the past five decades, including the long-term average for housing units completed. Builders exceeded that average during the housing bubble (shown in red on the graph). The result was an oversupply of homes on the market, so home values declined. That was one of the factors that led to the housing crash back in 2008 – and it’s very different than the inventory available today.
Since then, the level of new home construction has fallen off. For the last 14 years, builders haven’t been able to construct enough homes (shown in green on the graph) to meet the historical average. That underbuilding left a multi-year inventory deficit going into the pandemic.
2. The Pandemic’s Impact on the Housing Market
Then, when the health crisis hit in 2020, it fueled a renewed appreciation and a focus on the meaning of home. Having a safe space to live, work, learn, exercise, and more became increasingly important for Americans throughout the country. So, as mortgage rates dropped below 3%, buyers eagerly entered the market looking to secure a home that would fulfill their changing needs. At the same time, sellers hesitated to put their houses on the market as concerns about the pandemic mounted. The result? The number of homes available for sale dropped even further.
What Does This Mean for You?
For a buyer, low inventory is a challenge. You want to find the home of your dreams, and you don’t want to settle. But what if there just aren’t that many homes to choose from? There is some good news. Experts project more homes will soon become available thanks to sellers re-entering the market. Danielle Hale, Chief Economist at realtor.com, offers perspective:
“We expect that we’ll start to see a turnaround and inventory will stabilize and start to go up a little bit in 2022. . . . But that means we’re looking at inventory levels of roughly half of what we saw before the pandemic. For buyers, the market is likely to continue to move fast. If you see a home you like, you want to jump on it right away.”
So, inventory is still low, even though more homes are expected to become available. But you shouldn’t put your plans on hold because you’re waiting for those additional houses to hit the market. Instead, stick with your search and persevere through today’s inventory challenges. You can find your next home if you’re patient and focused, and your agent can help.
The number of homes available for sale is still low. So, if you’re looking for a home but you’re having trouble finding one, hang in there. Homeownership is a worthwhile and life-changing goal. The key is sticking with your search, working with a real estate professional, and trusting the process. You will find the right one.
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