With a strong economy and the lowest unemployment rate since 2000, more Americans are in the market to buy a home—yet sales are stagnant. Existing-home sales are down about 1 percent year over year, according to the National Association of REALTORS®.
Low inventory is posing less competition for sellers, and homes are selling fast. A property will likely have a buyer under contract within 26 days, according to a survey by realtor.com®. That’s much quicker than historical averages, which have trended toward 50 to 60 days. “We’re in a bizarre world of a heated housing market where home sales are not rising,” NAR Chief Economist Lawrence Yun writes in his latest column at Forbes.com.
The lack of inventory is haunting many housing markets across the country. “That is why more homebuilding is critical,” Yun says. “Whether it is the construction of affordable homes to meet first-time buyer needs, large-size homes to permit some existing homeowners to trade up, or developing an age-restricted retirement community, empty new homes will satisfy the rising housing demand.”
However, “just trying to get existing homeowners to list without building new homes means forcing people to play a risky game of musical chairs with no new place to sit once a sale is made,” he notes.
Many would-be sellers aren’t moving because they are concerned about finding a home to buy in a tight-inventory environment. The median length to stay in a home by recent sellers has now swelled to 10 years; historically, it was about six to eight years.
Yun says greater homebuilding will not only generate more inventory in a tight housing market but also create jobs, boost the local economy, and raise tax revenue. It will also “make home prices moderate and raise the homeownership rate,” he writes.
Source: “Living in Bizarro World: The Housing Market Is Hot, But Home Sales Aren’t Rising,” Forbes.com (June 6, 2018)