#HousingMarket #RealEstate #InventoryGrowth #EconomicRecession #ConstructionCoverage #HousingShortage #MortgageRates #MarketCorrection
The housing market is witnessing a significant shift as the first hints of recovery in inventory levels emerge. According to a detailed report by Construction Coverage, there has been a 4% increase in national housing inventory in the first quarter of 2024, shedding light on the beginning of a rebound from the decades-long inventory shortage. This disparity in housing stocks has roots stretching back well before the COVID-19 pandemic, exacerbated by the historically low number of new homes constructed in the decade following the Great Recession—the smallest amount since the 1960s. This shortage has had a more severe impact on certain areas than others.
The data analysis by Construction Coverage highlights how different regions across the United States are experiencing varying levels of inventory growth. For instance, certain areas like the Midwest and the Northeast, including states like Kansas and Rhode Island, are still grappling with critically low supply levels. In contrast, states in the South such as Florida, along with Hawaii and Montana, are beginning to see conditions that are more favorable to buyers, indicating a regional disparity in how the housing market is recovering. The largest cities experiencing year-over-year increases in housing inventory include Denver, El Paso, and Dallas, suggesting that the tide may be turning, albeit slowly, in some of the nation’s key markets.
However, this slight uptick in inventory does not immediately translate into a buyer’s market, as the existing stock would only sustain the current pace of sales for approximately 2.9 months, a modest increase from the year before. Moreover, with mortgage rates now exceeding 7%, there’s a potential signal towards a correction in housing prices as we head into 2025. This scenario, although not as drastic as the 2008 collapse, is significant and underscores the complexity of the housing market. The market’s large scale means any correction process is likely to be slow and nuanced. As the housing inventory begins to climb and mortgage rates continue to rise, stakeholders in the housing market, including buyers, sellers, and economists, are closely watching these developments, anticipating the possible implications for housing affordability and market dynamics in the near future.
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