The bump in housing stock during the end of last year and the beginning of this year was short lived as stronger spring and summer home sales combined with low mortgage interest rates absorbed the gain.
The number of U.S. homes for sale in September fell 6.4% year-over-year to slightly less than 1.5 million homes – the lowest level on record since at least 2013, according to the September Zillow Real Estate Market Report. It was the seventh straight month of annual inventory declines, following a six-month stretch of inventory growth between September 2018 and February 2019 that reversed a streak of 44 consecutive months of inventory declines dating to January 2015.
Market conditions prevailing during the respective periods of inventory growth and decline may help explain the reversal. Last fall, mortgage interest rates spiked to multi-year highs and the stock market swooned amid trade uncertainty and in response to Federal Reserve rate hikes – a brief period of volatility that may have given some buyers pause. Fast-forward to the spring, and rates had again begun to fall and the stock market had clawed back much of its losses, which likely pushed buyers back into the market. Recent data on existing home sales and new housing starts show this bounce back in demand, with both showing unexpectedly strong results.
The Zillow report also presents recent data and charts showing home value appreciation steadying and stable rents.