Real Estate

Falling inventory forces homebuyers to move at fastest pace ever

More buyers making offer before seeing home

Housing inventory fell 8.9% from last year in the second quarter of 2017, sending homebuyers scurrying to beat the rising competition.

Housing inventory dropped for nine consecutive quarters, and is currently down a full 20% from inventory levels five years ago, a new report from Trulia shows.

And now, homebuyers are snatching up homes at the fastest pace since Trulia began tracking in 2012. While 57% of homes were still on the market after two months in 2012, today that number shrank down to 47%.

The chart below shows the relationship between housing inventory and the amount of time homes stay on the market.

Click to Enlarge

Housing inventory

(Source: Trulia)

Competition is so fierce, in fact, that 33% of Americans who bought a home in the last year made an offer without even seeing the home in person, according to a survey from Redfin, an online real estate brokerage.

This is up from 19% of buyers who placed an offer on a home without seeing it first last year. Among Millennials, even more placed offers without seeing the home in person — a full 41%.

And while that survey showed affordable housing was the most prevalent economic concern, only 5% of homebuyers said they would cancel their home-buying plans if rates surpass 5%.

As supply continues to dwindle, a new report from the National Association of Realtors showed pending home sales dropped for the third consecutive month, possibly a sign that low housing supply is beginning to curb demand.

However, while pending home sales showed a decrease the past few months, existing home sales continue to increase, NAR’s report shows.

But the pending home sales report showed the inventory shortages are hitting hardest in the entry-level housing market, which saw decreased home sales of 7.2% from last year while homes priced at over $1 million saw sales increase by 29.1% from last year.

One expert explained the housing inveventory shortage is having a major impact on the market, and relief is nowhere to be seen. 

“Today’s numbers are yet another indication that the lack of homes for sale is having a major, negative impact on the market,” realtor.com Senior Economist Joseph Kirchner said. “The future direction will be brighter if and when we see a significant uptick in inventory, but that unfortunately doesn’t seem to be right around the corner.”

The persistent and disproportional drop in starter and trade-up home inventory is pushing affordability further out of reach of homebuyers, Trulia pointed out in its report. Starter and trade-up homebuyers need to spend 3.1% and 1.7% more of their income than this time last year, whereas premium homebuyers only need to shell out 0.9% more of their income.

Most Popular Articles

CFPB to consider changing or eliminating TRID rule

The CFPB has been taking a long, hard look at some of its rules and regulations. Next up on its list to review is TRID, and it looks like eliminating the rule entirely is not off the table.

Nov 20, 2019 By

Latest Articles

Tech-focused real estate company REX raises $40 million

Tech-focused real estate company REX announced this week that it raised $40 million in Series C1 funding to complete its national expansion and broaden the availability of mortgage, insurance, escrow and other services it offers.

Nov 21, 2019 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please