Home prices had the biggest increase in four years in May 2018, yet demand has not dwindled in the market. Supply, on the other hand, is even tighter than before.
Along with rising mortgage rates, home sellers are becoming even less incentivized from listing their home on the market, and are staying put in greater numbers. A survey by John Burns Real Estate Consulting shows that if rates increased 1 percent, 24 percent of homeowners say they would not move as a result, and 36 say they "may not." Meanwhile, the median price of existing homes sold in May was $264,800, with the highest price gains and tightest supply in Seattle, Denver, and San Francisco, CNBC reports.
The supply of homes for sale has been dropping on an annual basis for the past 36 months, according to the National Association of Realtors. The shortage is most acute at the lower end of the market, where demand is highest and where investors bought thousands of distressed properties during the housing crash, turning them into lucrative rentals. Younger potential buyers have already delayed homeownership due to the recession and high levels of student loan debt. They have also been hampered by high rents, making it more difficult to save for a downpayment.
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