More Americans are going home shopping as interest rates fall, Realtor.com’s newest snapshot of the U.S. housing market found. But buyers are running into a new obstacle to finding their perfect home: low inventory.
“The problem that we’re seeing right now is that we don’t have enough homes for sale. We haven’t had enough homes for sale for a long time,” Realtor.com Chief Economist Danielle Hale told Yahoo Finance’s The First Trade.
In July, Realtor.com says the number of newly listed properties slid 7% from a year ago, while the number of entry-level homes priced below $200,000 on the market fell by 9.9%.
Hale says they had started to see inventories grow earlier this year as more sellers hit the market. But last month inventories moved in the opposite direction.
“We saw no increase in inventories, so we’re starting to reverse that trend at a time when buyers are really trying to come back into the market,” Hale said. “It’s just bad timing.”
A recent note from Capital Economics looked at home sales in the San Francisco market: “Qualifying for a mortgage is of little help if you can’t find a home to buy. At 1.58 million in June, the number of existing San Francisco homes for sales is close to record lows. Moreover, the Census Bureau reported that the national homeowner vacancy rate was at 40-year lows in the second quarter. Vacancies are below average in 44 states and particularly tight in Nevada and Missouri.”
Total single-family sales declined by 0.5% in June from the month earlier, Capital Economics said.
If you are able to find the right home, though, Hale said it’s still a good time to buy. Mortgage rates remain near record lows, with a 30-year-fixed loan available for around 3.80%. Falling bond yields, plus the Fed’s recent rate cuts and volatility in stocks are likely to keep mortgage rates that low for the time being.
“For buyers in the market right now, the worry of increasing mortgage rates is not on the horizon,” Hale said. “They’ll probably be able to enjoy low mortgage rates for the rest of the year.”
“Housing data has been surprisingly weak in 2019, especially given the fact that mortgage rates have been so low,” Hale said. “In order to really see home sales happen, we’re going to need to see more homes available for sale.”