If you've followed the housing market at all this year, you've likely heard something about inventory. Inventory refers to the number of homes available for sale. This year, it's been lower than usual. And, when for-sale inventory is low and buyer demand is high – as it's been this year – prices rise and sellers hold most of the negotiating power.
In many markets, that has been the story this year. However, according to a new analysis from Trulia, whether or not low inventory will affect a buyer's home search depends on where that buyer is looking and what kind of home they're looking to buy. For example, starter homes had the largest drop in inventory last year, falling 10.7 percent. On the opposite end of the spectrum, the number of high-end homes for sale only fell 3.7 percent. Naturally, that means a first-time home buyer looking for an affordable home may have fewer homes to choose from than a luxury home buyer.
However, it also depends on where you live. According to Trulia's analysis, markets in the Southwest and Southeast have generally been adding enough homes for sale to keep up with buyer demand. In fact, Trulia's research shows double-digit increases in the number of homes for sale in some markets, especially in states like Florida and California. That could be an indication that we'll see inventory begin to improve in more markets next year.