Where Housing Inventory Grows, Sales Follow
In a recent article by First American Deputy Chief Economist Odeta Kushi, reported key findings were: existing-home sales are projected to end 2024 higher than one year ago; housing supply has increased in 34 of the top 50 markets we track on a year-over-year basis; and First American’s analysis suggests a strong and positive relationship between increasing new listings and improving sales.
According to the article authored by Kushi, Despite a year marked by elevated interest rates and the persistent rate lock-in effect, the housing market is showing signs of mild recovery. Our latest Existing-Home Sales Outlook Report indicates that existing-home sales are projected to conclude 2024 slightly above 4 million annualized sales, surpassing December 2023 levels, but still trailing historical norms. The year-over-year increase is partly attributed to an increase in inventory.(opens in a new tab/window) Nationally, for-sale inventory1 is 19 percent higher than one year ago but remains nearly 26 percent lower than pre-pandemic, November 2019 levels. New listings2 in November were just 0.5 percent higher than a year ago, and 16.3 percent lower compared to November 2019. However, real estate is local and it’s important to note that the growth in listings has not been uniform across the country. Moreover, not all housing inventory is created equal.
One unique factor about the housing market is that the seller and the buyer are, in many cases, the same – the existing homeowner. In order to buy a new home, you have to sell the home you already own, and then find a home to buy, but not just any home – one that you like better. The fewer homes there are for sale, the harder it becomes to find a home better than what you already own. Therefore, a lack of inventory doesn’t just prevent first-time home buyers from jumping into the market, but it also keeps existing homeowners staying put and limits existing-home sales. The opposite is also true.
