U.S. Housing Market Poised to Shift in Sellers’ Favor
Diminishing supply is likely to lead to faster sales and rising prices, realtor.com predicts
U.S. house hunters are very likely going to have a harder time finding a deal this fall as bidding wars and price appreciation return, according to a new economic forecast from realtor.com on Tuesday.
Economic conditions are going to tip the market back in sellers’ favor over the coming months as the number of listings on the market dwindles, offering buyers fewer choices. Increased competition will lead to faster sales and rising prices, according to realtor.com, which based its projections on data from January through June.
In June, U.S. sellers added approximately 40,000 new listings to the market, a meager increase of only 2.8% compared to last year.
The amount of supply on the market is key to buyers getting the upper-hand in negotiations, as options allow buyers to take their time in the housing search.
A confluence of positive economic factors, including lower mortgage rates, a buildup in supply for the first time in years and a generally strong economy, gave buyers an advantage this spring buying season. But the flood of new listings in the second half of 2018 and early 2019 are now drying up.
“If the trend we’re seeing continues, overall inventory could near record lows by early next year,” said Danielle Hale, chief economist for realtor.com, predicting that overall supply will start falling by October. Adding to buyers’ concerns is the persistent rise in asking prices. In June, the U.S.’s median listing price hit its highest level so far this year, at $316,000.
It’s difficult to pinpoint exactly why U.S. homeowners aren’t listing their homes, Ms. Hale said.
But part of the reason likely has to do with 30-year fixed mortgage rates, which, while very low, are higher than the 3.3% they were seven years ago when many people refinanced their homes or bought new ones.
“It’s likely a combination of rate-lock, recently decreased consumer confidence and older generations choosing to age in place,” she added. Despite a thriving jobs market, consumer confidence has fallen 4.4% over the past year.
(Mansion Global is owned by Dow Jones. Both Dow Jones and realtor.com are owned by News Corp.)
BY BECKIE STRUM
| ORIGINALLY PUBLISHED ON JULY 9, 2019 | MANSION GLOBAL
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