Bidding wars and faster home sales could soon become the norm again if the latest forecast on home inventories by realtor.com holds true.
The report forecasts that the number of homes for sale in the U.S. is set to decline again in the next few months, limiting the bargaining power of buyers until well into 2020. With fewer properties up for grabs, buyers face the prospect of paying more to secure their ideal home.
Realtor.com’s report notes that the U.S. median listing price in June was at its highest point so far this year, at $136,000. Homes spent an average of 56 days on the market, a two day rise from a year ago.
“It was only 18 months ago that the number of homes for sale hit its lowest level in recorded history and sparked the fiercest competition among buyers we’ve ever seen,” Danielle Hale, realtor.com’s chief economist, said in a statement. “If the trend we’re seeing continues, overall inventory could near record lows by early next year. So far there’s been a lackluster response to low mortgage rates, but if they do spark fresh buyer interest later in the year, U.S. inventory could set new record lows.”
Of course, the low number of homes on the market poses questions around why homeowners aren’t taking advantage of the situation to sell their properties and cash in on the higher prices.
“It’s likely a combination of a rate lock, recently decreased consumer confidence, and older generations choosing to age in place,” Hale said. She added that consumers are showing slightly more concern over a potential recession and future economic growth that could be making them skittish.
Another factor keeping homeowners in place is low mortgage rates, Hale said. Seven years ago, the 30-year fixed-rate mortgage reached its lowest average at 3.3%, according to Freddie Mac’s records. That prompted many homeowners to refinance and lock in lower monthly mortgage payments.
Rates are still low today, however they are 50 basis points higher than they were in December 2012. What that means is that many homeowners’ mortgage rates are well below today’s current rates, which may make them more hesitant to sell.