Housing market reaches a turning point in 2022
The housing market has delivered more than its fair share of challenges to homebuyers over the past two years. The biggest obstacles homebuyers faced during the pandemic were the limited number of homes for sale and the frequent, intense bidding wars that ensued as a result. These two obstacles have reached a turning point, creating a key opportunity for homebuyers.
The number of homes for sale has increased this year, especially during the spring season. Danielle Hale, Chief Economist for realtor.com, explains:
“New listings–a measure of sellers putting homes up for sale–were up 6% above one year ago. Home sellers in many markets across the country continue to benefit from rising home prices and fast-selling homes. That’s prompted a growing number of homeowners to sell homes this year compared to last, giving home shoppers much needed options.”
This is encouraging news. More homes coming onto the market give buyers a greater chance of finding one that checks off the items on their wishlist.
Buyer competition has cooled, allowing inventory to begin to recover
Mark Fleming, Chief Economist at First American, says inventory growth is happening not just because there’s an increase in the number of listings coming onto the market, but also because buyer demand has moderated some in light of higher mortgage rates and other economic factors:
“There has been a pickup in the inventory that we’ve seen recently, but it’s not from a big increase in new listings . . . but rather a slowdown in the pace of sales. And remember that months’ supply measures the inventory of sales relative to the pace of sales. Same inventory, fewer sales, means more months’ supply.”
The market is shifting away from the frenzied buyer competitions seen during the pandemic, which gives the available inventory a chance to grow. In their most recent forecast, realtor.com also credits the moderation of demand as a key factor in inventory growth:
“As rising inflation and mortgage rates bring U.S. housing demand back from the 2021 frenzy, . . . inventory will grow double-digits over 2021 and offer buyers a better-than-expected chance to find a home.”
Buying a home is within reach for those ready to act
The combination of more homes coming onto the market and a slower pace of home sales means borrowers have more options to choose from as they search for their next home.
It’s important to recognize that there isn’t a sudden surplus of inventory- just more homes to choose from than even a few months ago. While this is a promising step in the right direction, borrowers still need to be decisive and move quickly when they find the right home.
Fast-acting buyers may be faced with less competition from other buyers, too. If you’ve been waiting to jump into the market because the intensity of the bidding wars was intimidating or if you’ve been outbid on several homes, this moderation could help make the homebuying process a bit smoother. It’s not that it’ll be easy or that bidding wars are a thing of the past, but buying a home shouldn’t feel as impossible.
Closing thoughts
As the housing market begins its shift back towards pre-pandemic levels, buyers are presented with a key opportunity. Moderating levels of buyer competition and increase in inventory ease the process of searching for a home for many- it might be time to act if you’ve been holding off.