A recent Black Knight Financial Service analysis found that the rise home prices is beginning to stabilize. Despite the slowdown, the amount of housing inventory is continuing to decrease.
"There should be 3 million homes on the market right now," said Chief Economist Lawrence Yun of the National Association of Realtors (NAR). "Yet, there are only 1.9 million."
MoneyWatch reports that theoretically, a shortage of inventory would suggest that home prices would increase indefinitely as demand outweighs supply. But housing is different than typical products— bankers, mortgage companies, realtors and government agencies all need to be assured a buyer can legitimately afford to purchase a house before they can place a down payment. With prices at prohibitive levels, many don’t have the option to even try to buy.
Also aggravating inventory are the Hurricanes Harvey, Irma, and Maria. The labor force and materials that would typically bring new houses to the market will now be concentrated on rebuilding homes that were destroyed or damaged in the storms. Areas hard-hit by the storms represent 10 percent of the country’s housing market.