More buyers are being tempted by the lower mortgage rates on offer this fall, but the rapidly shrinking inventory of affordable homes for sale means that few are able to find something suitable to buy, claims a new report from realtor.com. The result is more intense competition between first-time buyers and move-up buyers.
Housing inventories across the nation continue to shrink. Realtor.com’s latest data shows inventory levels in September were down 2.5% compared to one year ago, marking a faster rate of decline compared to the previous month. Moreover, the number of listed mid-market homes priced between $200,000 to $750,000 – the largest segment in the housing inventory – showed 0% growth in September. Indeed, inventory at this price point is even set to decline next month, experts say.
"The mid-tier of housing represents nearly 60 percent of homes for sale on the market, making it a solid indicator of how tight inventory levels are in the U.S.,” said George Ratiu, senior economist for realtor.com. “After more than a year and a half of solid growth in this segment, we're seeing inventory levels stall out and flat-line. If, or better yet, when inventory in this segment begins to take a downturn, the vast majority of homebuyers are going to feel its effects as their options rapidly dwindle.”
Moreover, the number of available entry level homes priced at $200,000 or less has fallen 10% in the last year.
At least those looking for something more expensive will find more options. The number of listed homes priced above $750,000 grew 4.7% in September compared to one year ago, though this category could also see declines if strong homebuying demand persists through the rest of the year.
"Buyers looking for their next home have faced the headwinds of tight inventory and a competitive market this year,” Ratiu continued. “While lower mortgage rates and the arrival of fall promised a reprieve, conditions continue to tighten as demand remains strong. September inventory trends, especially in the mid-market, may be the canary in the coal mine that we could be headed for even lower levels of inventory in early 2020.”
The median list price nationwide in September was $305,000, up 4.3% over last year. Nationally, homes sold in an average of 65 days in September, one day slower than a year ago.