June saw a massive increase in the availability of housing inventory, with the number of houses available for sale increasing 19% compared to the same time in 2021. This increase could help to alleviate a persistent shortage in the number of available houses, which has driven up prices and made competition for existing inventory fierce. It could also help to counter the effects of higher inflation and interest rates, which are driving the cost of real estate up.
The Increase in Inventory
According to Realtor.com, the number of available home listings has gone up by 19% since June 2021, the largest increase in the number of available homes in five years. This includes a significant increase in the number of new homes being put on the market, which is up 4.5% from the same time last year. However, the number of available homes is still only about half of what it was prior to the COVID-19 pandemic, which took a substantial number of homes off the market.
The State of the Marketplace
As it stands, there is far more demand for homes than there are houses available for purchase. This means that bidding for each individual property is fierce, driving overall prices up to a point where many homebuyers simply cannot afford it. On top of that, interest rates are on the rise thanks to a shift in policy from the Federal Reserve, meaning that mortgages are more expensive to take out. And, to make matters worse, high inflation has driven up prices for all sorts of goods and services, with the real estate market being no exception to this trend.
The Potential Impact on the Market
With more houses being put on the market, that means that there will be more homes to satisfy the massive demand. This means that buyers will need to bid less for homes, driving overall prices down. This could also help to counter the effects of inflation and high interest rates, which together have driven home prices up to a level that has made them unaffordable for many people.
How This Could Affect You
If you are looking to buy a home, the increase in available homes can be seen as generally positive, as the cooling market will result in lower prices. Sellers, meanwhile, may start to see the number of bids for their property start to decrease, as there is less demand relative to the number of homes available for sale. With inflation still high and interest rates on the rise, however, it may be some time before the market truly begins to cool.
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