A market shift that will impact buyers well into 2020 is likely on the way, according to realtor.com’s June 2019 trend report.
Total inventory grew 2.8 percent year-over-year, according to the study, but annual gains have softened throughout the year; the number of newly listed homes dropped 2.3 percent year-over-year in June.
If this trend continues, inventory growth is set to flatten over the next three months and could start to once again decline in October.
“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, chief economist for realtor.com, said in a statement. “If the trend we’re seeing continues, overall inventory could near record lows by early next year.”
Declining inventory could lead to the return of bidding wars, stronger price appreciation and quicker home sales, according to the report.
“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 this winter,” Hale added.
While rates are historically low, they’re still higher than they were seven years ago when they reached their lowest point, at 3.3 percent for a 30-year-fixed-rate mortgage. Rates are higher than one-third of weekly rates seen over the last seven years, which means many homeowners have mortgage rates lower than today’s levels, according to the report.
Hale says that the reason why people aren’t putting their homes on the market is difficult to pinpoint. “It’s likely a combination of rate-lock, recently decreased consumer confidence and older generations choosing to age in place,” she added.
Consumer confidence fell 4.4 percent over the past year, signaling that potential homesellers are more worried about a possible recession or future economic growth, according to the report.
In the short term, the U.S. median listing price likely reached its high point for the year in June, at $316,000, according to realtor.com’s data. Prices usually peak in July, but the report notes that the likely high point came earlier in the year due to a mismatch of what’s available and what buyers want.