Is Housing Supply Rising? If So, What Does That Mean for You?

One of the most critical indicators in the housing market is the number of homes sold. The latest numbers still show that the housing market is sitting on historically low homes on the market, but there are signs inventory is picking up.

Odeta Kushi, Deputy Chief Economist at First American, made the following statement regarding housing inventory.

“It looks like inventory may have hit bottom (we’ve seen this in the higher frequency data as well). Unsold inventory in May was at 2.5 months supply, up from 2.4.”


The graph below shows an illustration of the housing supply rising since the beginning of the year. Although we are nowhere close to our average supply inventory, which would be a six-month supply of homes, the increase in housing inventory has been steadily climbing, which is a good sign.


With the housing supply rising and interest rates at an all-time low, some people ask what that means for me?

Buyers: More Options Are Arriving, so It’s Time To Act

If you’re a buyer, more inventory coming to market is excellent news. Many potential buyers have been approved, but due to multiple bid offers and a willingness of competing bidders to close fast, many qualified buyers have been forced out of the market. With more housing supply means more options and less competition.

According to the latest Monthly Housing Market Trends Report, supply levels are continuing to increase, which is different from the typical summer market:

“In June, newly listed homes grew by 5.5% on a year-over-year basis and by 10.9% on a month-over-month basis. Typically, fewer newly listed homes appear on the market in June compared to May. This year, growth in new listings is continuing later into the summer season, a welcome sign for a tight housing market.”

If you’re having trouble finding your next home, be patient. As the housing supply increases, you will be able to take advantage of today’s low interest still. It may just take a little more time to wait for the housing supply to get closer to normal levels.

Sellers: Our Supply Challenges Aren’t Over Yet, so Now Is the Time To Sell

If you know you want to sell your house in the next 18 months, you should not put this off any longer. With Interest rates and housing Supply at historic lows, this is the perfect time to sell your home. We are currently facing one of the most important seller markets we have seen in 30 years. The year’s month-over-month gains in homes for sale have helped buyers, but we’re still very much in a sellers’ market.

The graph below shows that even if the number of home sales rises, we are still significantly below normal supply levels, so you still have plenty of time to take advantage of this market. More homes are coming on the market now, but selling your home this summer gives you the chance to maximize your potential sale price and control most of the terms.


Bottom Line

More homes for sale means more options for buyers and more competition for sellers: however, with interest rates still at historic lows, there are still many reasons to purchase a home today. Whether you’re looking to buy or sell, we believe that now is a great time to be weighing your housing needs and options.

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