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The Housing Supply Issue Is Only Getting Worse

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The Housing Supply Issue Is Only Getting Worse


September 25, 2020
Sold home sign as the housing supply gets worse
By William

As newly built home sales exploded in August, supply dwindled to an unbalanced amount. A six month new home supply is considered balanced, according to CNBC, but builders only have 3.3 months’ worth. But this is not just a new home issue. Existing home sales also exploded in August, leaving the inventory down to only a three-month supply. It’s a result of a culmination of issues and realities: huge demand for homes, low mortgage rates, hesitant sellers, the list could go on. Housing starts are not matching the insatiable demand either, but did increase 12% annually, which is only 1% higher than this time last year.

While the pandemic has created huge demand from buyers, it has done just the opposite for potential sellers. About 400,000 fewer homes have been listed for sale since the pandemic began, according to realtor.com. Potential sellers were concerned about safety issues in showing their homes and in moving, and they were also worried about selling into a rough economy.

“The majority of sellers are also buyers, so even as new listings hit the market, another buyer is also added,” said Javier Vivas, director of economic research for realtor.com. “Adding to the inventory issues, thousands of previously vacant homes, such as second homes and rentals, have been reoccupied by their owners during the pandemic, effectively taking them off the market.” 

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