Buying a home right now may be harder than ever, with inventory of available homes for sale not meeting demand, making it challenging for some buyers to secure their home.
“Inventory is going to dry up. I mean, inventory is up. But you can see it's up from a very low base from where it has been. So you're up maybe 15% from the historical low," SitusAMC Managing Director Tim Rood told Yahoo Finance Live (video above). "That's hardly time to celebrate.”
A lack of inventory has sparked bidding wars, waived contingencies, and soaring home prices during the past few years. But the housing market hit the brakes as the central bank continues to hike interest rates, which in part, has caused mortgage rates to shoot up from historical lows while home prices still remain inaffordably high.
While home price growth has slowed from the pandemic-era frenzy, inventory has rebounded. But not by a lot. It's still down nearly 42% compared with 2019, according to Zillow. Nationally, there were 155,000 more homes for sale in September versus the previous year, which is an increase of 26.9% over last year, Realtor.com found.
Since the recent slowdown, buyers who are priced out of the market have retreated to the sidelines and sellers are more reluctant to list their homes. Sellers are less active than last year, as newly listed homes dropped 9.8% on a yearly basis, Realtor.com reported.
“And now as sellers are backing off, then you're going to have more and more," Rood said. Then, "you're gonna have fewer and fewer homes on the market.”
That means price points will become stickier as demand remains elevated even with these higher interest rates and supply lags behind, he said.
Meanwhile, builder sentiment fell for the ninth consecutive month, marking the lowest level since May 2014, with the exception of the spring of 2020, according to the National Association of Home Builders (NAHB). Nearly a quarter of homebuilders also reported lowering home prices, up from 19% in August.
“They're just halting building right now. And they're slashing prices on whatever they've got because they've got all the carrying costs, all the tail risk associated with it," Rood added. "So don't expect them to help out next year."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv