CHARLOTTE – It seems like the issues facing the housing market change every so often. Last year, it was all about the mortgage rates going up. This year, it seems to be back to an issue of inventory.
There were some surprises that came out in the first quarter of this year, including home builder results on the upside. However, unexpected home price increases and a drop in pending sales were also a part of the reporting.
Misery for Home Buyers
Buyers are finding it hard to find a home they can make an offer on, which is similar to the issues of 2021, but in a bit of a different way. While it’s a supply issue, it’s also a demand issue.
New home listings fell by more than 22% across the nation compared to last year during the four weeks ending on April 23rd. This is one of the largest declines in inventory since the beginning of the COVID-19 pandemic, according to Redfin.
Similar numbers were also reported by Realtor.com with a 20% drop seen in March compared to the previous year. When comparing March 2023 to April 2020, the number of people willing to sell their homes is pretty close to the same.
Why is Inventory so Low Right Now?
Mortgage rates play a big role in the inventory issues. Since most homeowners that want to sell would also have to buy another home, they have to consider if they are willing to give up their current low mortgage rate. This is a hard decision for most homeowners.
Most of the move-up buyers polled by Realtor.com said they felt trapped due to the current mortgage rates. Since these potential sellers don’t want to be saddled with a higher mortgage rate, they are deciding to stay put instead of buying a bigger, more expensive home.
How Low Inventory Impacts Buyers
The frustration is still there for home buyers as the lower inventory numbers mean it’s harder to find a home and the competition is still stiff. Couple this with the higher mortgage rates pushing some potential buyers out of the market and it’s causing all kinds of issues for buyers seeking a home right now.
Home sales in March dropped by more than 5%, which is a bigger drop than most expected. At the same time as this drop, there is a bit of a frenzy for homes that are on the market with 28% of homes still selling above the list price.
Inventory Numbers Benefit Home Builders
While buyers and sellers might feel a bit stuck, home builders are seeing some gains due to the low inventory numbers. About one-third of the housing inventory is new construction, which is higher than the historic norm.
However, the higher interest rates and crazy economic uncertainty are still making it harder than normal for home buyers to sell homes. Cancellation rates are still higher than they should be, which is still a struggle for builders.
Things are not back to normal with the real estate market and may not go back to normal anytime soon. With inventory lower than needed and both buyers and sellers struggling with higher mortgage rates, it’s still a rather unique real estate market right now.
I would love to be part of your journey when the time is right for you. If you ever have a real estate question or need, or know someone who does, trust that you can turn to me. I will help you make the right move! Anna Granger (704) 650-5707 | email@example.com | www.1stchoicepropertiesinc.com