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Why are Existing Home Sales Down?
The latest Existing Home Sales Report issued by the National Association of Realtors(NAR) revealed that home sales have decreased for four consecutive months and are at their slowest pace in over two years. This has some industry leaders puzzled considering the fact that the economy is strengthening, unemployment is down, and wages are beginning to rise. This begs the question: “Where are the buyers?” Actually, agents in the field of most communities are still seeing strong desire from prospective purchasers. They have a list of potential buyers ready to go if the right houses come on the market and they claim it is not a shortage of demand, but is instead a shortage of inventory that is causing the market to soften.Why is there a shortage of inventory?You only need to look at the graph below to understand: New construction sales over the last ten years are far below historic numbers from 1995-2002.A recent industry report looked at building permits and concluded:“If construction over the past decade matched historic norms, accounting for population change, the country would have had 2.3 million more single-family home permits.”That decade of not building enough homes is the primary reason for the concerns about today’s market.Wait, weren’t ... more
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