Why Low Inventory is a Win for Sellers

Real estate continues to be called the ‘bright spot’ in the current economy, but there’s one thing that may hold the housing market back from achieving its full potential this year: the lack of homes for sale.

Buyers are actively searching for and purchasing homes, looking to capitalize on today’s historically low interest rates, but there just aren’t enough houses for sale to meet that growing need. Nadia Evangelou, Senior Economist & Director of Forecasting for the National Association of Realtors(NAR), explains:

“These ultra-low mortgage rates make homebuying more attractive, boosting activity to the highest level since 2006…Nevertheless, inventory continues to fall, widening the gap between housing demand and supply.”

According to NAR, right now unsold inventory sits at a 2.5-month supply at the current sales pace. To have a balanced market where there are enough homes for sale to meet buyer demand, the market needs 6 months of inventory. Today, we’re nowhere near that number. If this trend continues, it will get even harder to find homes to purchase, and that may slow down potential buyers. Danielle Hale, Chief Economist for realtor.com, notes:

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Source: “Things to Consider When Selling Your House” Winter 2021 edition, courtesy of Keeping Current Matters