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Home Sales Are High—but if Not for Low Inventory, They’d Be Even Higher

This year is shaping up to be the best in a decade for home sales (yay!), but that doesn’t mean that buying a home is easy (uh-oh). Houses are flying off the market at the fastest rate since the housing bust in 2007, so we know that buyers must be working hard to find that perfect home and get it under contract. Harder than ever, perhaps.

Insights from our daily surveys of visitors to realtor.com® tell us that their biggest challenge is the low inventory of available homes, which is holding us back from seeing even more sales.

In June, the No.1 obstacle to making a purchase, as reported by 40% of buyers on realtor.com, was simply finding a home that met their needs. This was also the top problem last June, but then only 37% of buyers reported the issue.

And it’s no wonder that more people are reporting that just finding a home is a problem. We have about 13% more people looking to buy this summer, yet there are 5% fewer homes for sale. No matter how you do the math, it adds up to a shortage for buyers.

So it’s not surprising that this low level of inventory—along with the rapid-fire speed at which homes are selling and the high level of price appreciation—has led to the general perception that we’re in a seller’s market. Fair enough. But that doesn’t mean it’s all smooth sailing for sellers either.

In fact, sellers report that their biggest issue is time: In June, 40% of sellers said they had just started thinking of selling.

That percentage has been growing each month this spring, so at least we can be encouraged by more owners thinking of selling their homes as prices recover and mortgage rates remain temptingly low.

But selling isn’t a simple matter when you don’t have a place to go.

The No. 2 problem for potential sellers is finding a home to purchase first. At least the 18% who reported this as a selling obstacle aren’t willing to risk selling their current home without having a new one under contract. And that certainly makes sense in this market.

We estimate that currently 90% of sellers also intend to buy, so clearly whether the purchase needs to come before or simply close to the current home’s sale, not being able to find a home is limiting both demand and supply.

Then the next biggest issue for sellers is making necessary improvements in order to sell. With remodeling and home improvement booming, potential sellers are running into challenges getting their own improvement projects completed—possibly because of competition for top-notch contractor services.

Sales typically peak in June or July, but this year might turn out to be an exception. With low mortgage rates, continued evidence of strong demand, and an increasing number of both buyers and sellers just starting to explore, we could have an extended peak.

But here’s the thing about peaks: They don’t last forever. The seasonal pull is as powerful as the tide—eventually we will run out of time as school starts, weather shifts, and a new president gets elected. These factors will likely make this fall slower than usual, especially relative to the very busy spring and summer.

If you are thinking of buying this year, get out there now! The clock is ticking louder than ever.

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Source: Real Estate News and Advice – realtor.com » Real Estate News