The decline in listing inventory could last a few years, experts suggest

The U.S. housing market is experiencing a shortage of homes available for sale, which is unlikely to resolve in the next few years. Experts told the U.S. News & World Report that the 2008 housing crisis and a growing number of millennial homebuyers are among the factors that contribute to the low listing inventory. 

In 2021, the monthly for-sale supply of American homes did not reach 1 million, The Real Deal analysis suggests. The inventory dropped to its lowest level in December of 2021, with only 753,102 units available on the sales market. 

Real estate experts argue that the current decline in listing inventory goes hand in hand with increased demand from potential buyers, especially millennials. This age group makes up more than 40 percent of homebuyers, according to the NAR Generational Trends Report. In addition, people of all generations still see homeownership as a “cornerstone of the American dream," which leaves no room for demand to slow down. 

Low housing inventory and high demand from buyers cause prices to skyrocket. Home values increased nearly 20 percent last year, according to the data by the S&P Case-Shiller national index of home prices. 

The rising interest rates could demotivate some buyers from entering the market. However, they will not resolve supply issues. “We need to get that supply chain moving,” Lisa Knee, co-leader of EisnerAmper, told the U.S. News. According to her, new constructions could improve the inventory of existing homes. 

But these changes will not happen immediately. It will take “about four years before we see things level off,” says Jeff Taylor, the founder and managing director of mortgage solutions firm Mphasis Digital Risk.

Resources:

“Understanding Housing Inventory and What It Means for You,” by Maryalene LaPonsie (U.S. News & World Report, 2022)

“NAR Report Shows Share of Millennial Home Buyers Continues to Rise,” (The National Association of Realtors, 2022)

“Listings shortage could endure for years, experts say,” by TRD Staff (The Real Deal, 2022)

“Nationwide housing inventory plunges to historic low,” by Bill Egbert, research By Matthew Elo (The Real Deal, 2022)

“How 4 Experts Say You Can Prepare Now for a Busy Housing Market This Spring,” by Jason Stauffer (Time, 2022)