The coronavirus pandemic has thrown the housing market into chaos, but a new report from tech firm and brokerage HouseCanary offers a glimmer of hope: The ongoing inventory shortage may improve later this year.
The report is based on public data, such as that from tax assessors’ offices, as well as from the hundreds of multiple listing services HouseCanary works with. And the ultimate conclusion is that “the gap between net new listings and the number of listings going into contract continues to shrink.” The report states that this shrinking gap means housing levels may be “stabilizing” and that “inventory levels may finally be reaching a bottom.”
In the immediate term, HouseCarnary expects inventory shortages to continue and high prices should stick around. But looking just a bit further down the road, the report suggests some relief could come at the end of this year’s third quarter, or at the beginning of the fourth quarter.
The report also indicates price growth itself may be slowing.
The inventory shortage of the last year has seen soaring prices, and the report states that as of July 9, the median single family home price of all listings in the U.S. was $388,939. The median closed price was even higher, at $396,115. Those numbers are up 12.9 percent and 24.6 percent, respectively, year-over-year.
However, the report also notes that in July, “month-over-month, the median price of single-family listings is down 0.8 percent and the median price of closed listings is up 1.9 percent” — both numbers that suggest prices aren’t climbing quite so fast now.
These findings should come as good news to buyers and their agents, as competition could theoretically be somewhat cooler in the coming months.
However, the report does also note that median days on market as of July 9 stood at just 28 — down 30 percent year-over-year. And while there does appear to have been a slight tick upward in days on market recently, the report nevertheless concludes that the year-over-year decline “further indicates the deep competition faced by buyers who are having to make quick offers at or above list price in order to get an offer accepted in the current market environment.”
Whatever happens, though, it’s clear that inventory remains one of the most dominant stories of the coronavirus period, and that a new chapter dominated by a shrinking gap between new listings and listings going under contract may be on the horizon.
“Should this pattern continue to hold,” the report concludes, “these deficits may very well turn into a surplus within the second half of 2021.”
In a statement on the report, HouseCanary’s CEO Jeremy Sicklick also speculated that the legislative landscape could further help would-be homebuyers.
“In the immediate term, we expect the supply shortage to continue putting upward pressure on prices as mortgage rates remain at historical lows,” Sicklick said. “As some of the Biden administration’s legislative policies begin to take hold, the housing industry may see larger changes that could help first-time homebuyers, increase the affordability of housing and address racial inequities.”