The most significant decrease in 13 months was observed as the percentage of homes available for purchase in the United States decreased by 6%, as stated in a recent Redfin report.
Continuing a trend of double-digit declines for the past 10 months, new listings experienced a 23% drop. This contributes to the ongoing scarcity of housing inventory after the pandemic, with recent data revealing a staggering 39% decrease in the number of homes available for sale compared to June 2018, five years ago.
The limited housing inventory is partly due to a prolonged slump in homebuilding and fluctuating mortgage rates. Mortgage rates reached record lows during the pandemic but have since more than doubled, currently standing at close to 7%. The low rates in 2020 and 2021 drove a surge in homebuying, depleting the available inventory. As rates started to rise in early 2022, potential home sellers held back, worsening the shortage. Homeowners are discouraged from selling due to the elevated rates and their preference to keep comparatively lower mortgage rates.
The limited housing inventory is partly due to a prolonged homebuilding slump and fluctuating mortgage rates. Rates reached record lows during the pandemic but have since doubled to around 7%. This led to a surge in homebuying, depleting inventory. Rising rates in 2022 caused potential sellers to hesitate, worsening the shortage. Homeowners are discouraged from selling due to higher rates and a desire to keep lower mortgage rates.
Based on recent economic updates, it appears that mortgage rates are expected to remain steady in the coming months, potentially prolonging low new listings and exacerbating the inventory shortage. The most recent inflation report indicates a cooling of price increases, while the Federal Reserve has announced a pause in interest rate hikes this month after nearly a year of consecutive increases. However, there is a possibility of a few more rate hikes later this year.