The National Association of REALTORS® (NAR) recently reported that there were just 1 million homes available for sale at the end of December, which was down 11.5% from November’s 1.13 million available homes. But these numbers don’t tell the whole story! Many homes counted in existing inventory are under contract and not truly available for purchase. In fact, there were only 666,000 “active listings” in January, well below what’s counted in NAR’s reporting and less than half of what we would expect to see in a normal market.
What’s the bottom line? Tight supply is going to remain a reality for some time. Many homeowners with low-rate mortgages are holding on to their property instead of listing it for sale. Plus, demand is only expected to rise, especially if rates move lower this year and more buyers decide to resume their home search. Fannie Mae’s latest Home Purchase Sentiment Index showed that an all-time survey high 36% of respondents said they expect mortgage rates to decline in the next 12 months.
This ongoing disparity between supply and demand is a key reason why home values continue to rise and why now provides great opportunities to take advantage of appreciation gains.