Missing Inventory Squeezing Homebuyers

Inventory missing from the housing market will have a profound effect on home sales this spring—and through 2017—as homebuyers feel the squeeze, according to Freddie Mac’s recently released monthly Outlook for April 2017. The Outlook expects home sales to drop to 5.9 million this year, a setback from ground gained in 2016.

Supply has tightened unsustainably because sellers stay reluctant to leave the security of an affordable home and let go of lower-than-normal mortgage rates, per the Outlook.

“Tight housing inventory has been an important feature of the housing market at least since 2016,” said Sean Becketti, chief economist at Freddie Mac, in a statement on the Outlook. “For-sale housing inventory, especially of starter homes, is currently at its lowest level in over ten years. If inventory continues to remain tight, home sales will likely decline from their 2016 levels. As we enter the spring home-buying season, all eyes are on housing inventory and whether or not it will meet the high demand.”

Accelerating home prices against stalled wage growth and rising interest rates are also pinching homebuyers. Slow progress on the new-home construction front is another contributing factor—according to the Outlook, housing starts this year are expected to be below not only the historical average, but also what is necessary to meet current demand.

Source: Freddie Mac

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