To put the U.S. housing inventory shortage into perspective, consider that existing housing inventory has declined, year over year, every month for the past two years.
In short, it’s harder and harder to find homes for sale, and when buyers do find them, competition is fierce. So what’s the answer?
The National Association of Realtors wonders if it might be the growing number of homeowners who think now is a good time to sell. More selling, in other words, could eventually lead to more listings.
That’s according to NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey, which found that 71 percent of U.S. homeowners think it’s a good time to sell. That’s up from 69 percent a quarter ago and up from 61 percent a year ago. Seller sentiment was most prevalent in the Midwest, where 76 percent of respondents said now is a good time to sell.
The numbers could buoy hopes among renters, who, according to NAR’s report, increasingly think it’s a bad time to buy. Fifty-two percent of renters think now is a good time to buy, which is down both from last quarter (56 percent) and a year ago (62 percent). Younger households, and those living in urban areas and in the costlier West region are the least optimistic.
Conversely, 80 percent of homeowners (unchanged from last quarter and a year ago) think now is a good time to make a home purchase. Respondents reported being less confident about the economy and their financial situations than earlier this year, despite continuous job gains in the country. In essence, NAR suggested, if more people had homes on the market, buyer optimism could see an uptick.
The question is, if homeowners are so positive that it’s a good time to sell, what’s stopping them from putting up their houses?
“There are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable home to buy,” said Lawrence Yun, NAR’s chief economist. “As a result, inventory conditions have worsened and are restricting sales from breaking out while contributing to price appreciation that remains far above income growth.”
Yun added that low housing turnover is one of the roots of the ongoing supply and affordability problems plaguing many markets.
One additional point of distress is dimming confidence about the economy’s direction, which NAR said is leading households to not have as strong feelings about their financial situation. According to HOME, respondents’ confidence that their financial situation will be better in six months fell to 57.2 in June after jumping in March to its highest reading in the survey. A year ago, the index was 57.7.
“It should come as little surprise that the confidence reading among renters has fallen every month since January (64.8) and currently sits at its lowest level (53.8) since tracking began in March 2015 (65.7),” Yun said. “Paying more in rent each year and seeing home prices outpace their incomes is discouraging, and it’s unfortunately pushing home ownership further away‒‒especially for those living in expensive metro areas on the East and West Coast.”