Economists think the spring sales season will be the toughest in a decade, as rising prices and mortgage rates spark demand while listings are near a 20-year low.
“We think that 2017 will be the fastest market” since the peak of the last housing boom in 2006, says Nela Richardson, chief economist at Redfin.
So far this year, homes sell an average eight days faster than last year; and it’s not just hot spots like Seattle with a scarce supply of homes for sale, but also sleepier locales like Tampa, Fla.
The most challenging markets generally have a few things in common, such as strong job growth, with young first-time buyers looking for homes amid declining inventories, according to Svenja Gudell, chief economist at Zillow.
Economists had predicted earlier that the inventory crunch would ease this year; but instead, inventory has gotten tighter as demand increased rapidly and a pickup in new-home construction lagged.
Potential sellers have also become hesitant to put their homes on the market because rising prices and mortgage rates have made it more expensive to trade up.
In December, the number of homes for sale hit the lowest level since the National Association of Realtors began tracking such data in 1999. It ticked up slightly since then, but inventory in February remained 6.4 percent down year-to-year, and about 30 percent below the long-term average.
There is also a growing mismatch between an abundance of high-price inventory on the market and increasing demand for starter homes.
Source: Wall Street Journal (04/03/17) Kusisto, Laura
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