Some shocking numbers have just come in. It has been reported that total housing inventory dropped 10.8% in December to 1.65 million existing homes available for sale, the lowest level since the National Association of Relators (NAR) began tracking housing supply in 1999. Inventory decreased 6.3% from last year and has fallen for 19 consecutive months.
But there is good news. Despite rocky real estate waters going into 2017 on the crest of a tumultuous presidential election, recent findings from NAR show that: “Existing home sales closed out 2016 as the best year in a decade, even as sales declined in December as the result of ongoing affordability tensions and historically low supply levels.” And, if the 2016 numbers pouring in recapping last year are any indication of what’s ahead, the housing horizon is looking bright. NAR Chief Economist Lawrence Yun maintains, “Solid job creation throughout 2016 and exceptionally low mortgage rates translated into a good year for the housing market,” and further correlates the stunted swell of December to “higher mortgage rates and home prices combined with record low inventory levels,” both of which many experts anticipate will regain steadiness.
Still though, sweeping expert opinion tends to speculate that a massively constricted inventory is significantly holding back the flow of home sales. Chief Nationwide Economist David Berson states, “Importantly, and despite the slip in sales, the inventory of homes for sale fell to the lowest level in the 17 years for which the data is available,” as reported by Housingwire.com. Seemingly, young prospects suiting up to own for the first time are feeling the pressure more than others. Again, according to Lawrence Yun, “Constrained inventory in many areas…means it’s not getting any easier to be a first-time buyer.”
With these conditions and the recent decision reversal to reduce the FHA annual mortgage insurance premium staging some new upcoming challenges for the market, “It’ll take more entry-level supply, continued job gains, and even stronger wage growth for first-timers to make up the greater share of the market,” Yun contends. With a great wave of economic change advancing and 2016 in the rear, the focus ahead highlights supply for budding buyers.
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