If you have been following the housing market, you realize there is a shortage of homes for sale. This shortage isn’t just a today problem. It’s been a challenge for years.
Underbuilding Is a Long-Standing Problem
The main reason for the inventory shortage is builders haven’t been building enough homes or the right types of homes in recent years. The graph shows new construction for single-family homes over the past five decades, including the long-term average for housing units completed.
For 14 straight years, builders didn’t construct enough single-family homes to meet the historical average (while building too many condos). While new home construction is back on track now, the long-term inventory problem this created isn’t going to be solved overnight.
Today’s Mortgage Rates Create a Lock-In Effect
Essentially, some homeowners are reluctant to sell because they don’t want to give up the rate they have on their current home to take on today’s higher rate on a new home.
How This Impacts You
The low supply of homes for sale isn’t a new challenge.
- For buyers: There are still homes on the market, though many are outdated or need other remodeling help. Asking the seller for cash back is a way to pay for updates on a dated home.
- For sellers: Today’s low inventory actually offers incredible benefits because your house will stand out. There are still enough buyers in the market where the nicest homes are receiving multiple offers.