Just like any market, the housing market ebbs and flows over time.
Right now, it is facing one major challenge in particular: supply and demand.
Currently, there are more buyers looking to purchase homes than homeowners looking to sell. In a normal market, there is about a 6-month supply of homes for sale. Any number above that is considered a buyer’s market and anything below, a seller’s.
Today’s inventory is far below average. According to the Existing Home Sales report from The National Association of Realtors, there was a 2.5-month supply of homes in May 2021. This is slightly up from March’s modest 2.1-month supply, but below the 4.6-month supply of May 2020.
How long will the inventory shortage last?
Unfortunately, that’s a complicated question.
More homes will be built to keep up with demand, but builders are struggling with their own shortages when it comes to materials like lumber, slowing the construction of new homes. In the 1970’s, entry-level construction sat at 418,000 units per year, dropping to 64,000 units by 2020. Of course, not all first-time home buyers are looking for entry-level homes, but there is certainly a disparity between the number of buyers and new homes for them to purchase.
The good news is, we are starting to see inventory rise in Connecticut and beyond.
In May 2021, newly listed homes compared to active daily inventory hit a high of 44.4%, meaning more people are putting their homes on the market. These properties continue to go under contract quickly, which means buyers must be prepared to act fast.
Want to learn more about what this means for you?