Housing Inventory & Sales
The past year has seen substantial improvement in home sales for the overall housing market. But who would have thought, in light of the whole home foreclosure issue, that a tight inventory of available homes for sale could have had a limiting effect on sales.
According to the National Association of Realtors® (NAR) total housing inventory fell 8.5 percent at the end of December to 1.82 million existing homes available for sale. This figure represents a 4.4-month supply of available existing homes for sale at the current pace of sales. The 4.4-month supply is down from a 4.8-month supply in November, and is the lowest supply figure since May of 2005, a time nearing the peak of the housing boom, when it was 4.3 months.
The NAR says listed inventory is 21.6 percent below where it was a year ago when there was a 6.4-month supply. Additionally the NAR says “raw” unsold inventory is at the lowest level since January 2001 when there were 1.78 million homes available for sale. According to the National Association of Home Builders, at the end of 2008 there was a 10.4-month inventory supply, which represented 3.13 million available homes for sale.
Over the past several years the inflated housing inventory was heavily weighted with foreclosed properties being put on the market. Though the current inventory of homes is more in line with a healthy market, distressed properties are still a significant part of the picture. Proof of this is the percentage of foreclosure and short sales still in the sales mix.
In the month of December foreclosures and short sales, accounted for 24 percent of the sales. The 24 percent sales figure for distressed properties is significant, but is below the 32 percent share in distressed sales for December 2011. These figures are also testimony that, though the housing market is showing clear signs of improvement, it is not in complete health just yet.
NAR President Gary Thomas puts a positive spin on the whole picture in saying, “Although tight inventory is limiting home sales in many areas, overall sales are expected to stay on an upward trend. The biggest impact of tight inventory is upward pressure on home prices…[but] prices are still affordable in most of the country.”
We at Prominent Escrow are here to help buyers, refinancers and real estate/mortgage professionals close their transactions as quickly and smoothly as possible.