What Does Shrinking Inventory Mean To You As A Seller Or A Buyer

What Does Shrinking Inventory Mean To You As A Seller Or A Buyer

The price of any item is determined by the supply of that item, and the market demand. The National Association of Realtors (NAR) released their latest Existing Home Sales Report this week.

Inventory Levels & Demand

Amidst reporting on the fact that sales of existing homes rose 1.2% from January, and outpaced year-over-year figures for the fifth consecutive month, was the news that total unsold housing inventory is at 4.6-month supply. This is down 0.5% from last February and remains below the 6 months that is needed for a historically normal market. Consumer confidence is at the highest level in over a decade. Pair that with interest rates still under 4%, new programs available for down payments as low as 3%, and you have an attractive market for buyers. Buyer demand for housing remains twice as high as this time last year.


Prices Rising

February marked the 36th consecutive month of year-over-year price gains as the median price of existing homes sold rose to $202,600 (up 7.5% from 2014).


So What Does This Mean?

The chart below shows the impact that inventory levels have on home prices. Impact of Inventory on Home Prices | Keeping Current Matters 

NAR’s Chief Economist, Lawrence Yun gave some insight into the correlation:


"Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices. Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before (interest) rates rise."


Bottom Line

If you are debating putting your home on the market this year, now may be the time. The amount of buyers ready and willing to make a purchase is at the highest level in years. Contact a local professional in your area to get the process started.


Deborah Boyd Headshot
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Phone: 940-368-1306
Dated: March 27th 2015
Views: 1,133
About Deborah: My family has lived in North Texas for generations so I personally know the residential areas of Fri...

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