Home buying activity tends to pick up in the spring, as more and more buyers shake off the winter chills and prepare to enter the real estate market. This year, the spring home-buying “season” will be marked by low inventory across much of the country. And that will keep things competitive for home buyers seeking a property to purchase.
42: Number of Months Inventory Has Declined
Inventory has been the big housing headline for the last couple of years. And real estate markets nationwide continue to contract, as demand outweighs the supply of homes for sale.
According to Danielle Hale, chief economist for realtor.com, inventory within the nation’s housing market has been dropping steadily for years.
“This year  there is even less inventory than last year,” she told Forbes recently. “According to our February 2018 data inventory is down 8.5% from last February.”
According to Hale, housing market inventory (the number of homes listed for sale) has declined for 42 consecutive months. That’s nearly a four-year trend!
Granted, these are national averages. Housing trends and conditions can vary widely from one city to the next. For instance, larger metro areas tend to have more demand for housing, and often less inventory, than smaller surrounding cities. And the big tech hubs — like Austin, Seattle and Denver — are among the tightest real estate markets in the country as we enter spring 2018.
Tight inventory is affecting sales volume too. “We expect little growth in sales in 2018, given tight inventories,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York.
There has been an uptick in new construction permits nationwide. But it will be a while before this has any measurable impact on housing markets across the country.
According to Aaron Terrazas, as senior economist at Zillow:
“New construction has showed signs of perking up, but remains well below estimates of demand. More importantly, builders face rising labor, materials and land costs making it difficult to build at a price point attractive to entry-level buyers.”
What It Means for Buyers and Sellers
For home buyers, these trends highlight the importance of working with an experienced real estate agent when making a purchase. An agent can help you navigate the local real estate market and make a strong offer in a timely fashion. This is the key to success in a tight, competitive housing market. And those are the kinds of conditions we are seeing nationwide, as we enter the spring home-buying season.
Sellers can benefit from the high demand and relatively low supply we are seeing right now. Under these conditions, homes tend to sell faster and for a higher percentage of the initial list price. Multiple-offer situations are also more common when housing demand exceeds the available supply.
All in all, it should be an interesting spring for the real estate market.