Even in a housing market that has slowed significantly due to rising mortgage rates, the supply of homes for sale is roughly half of what it was in 2019.
The shortage is hitting some buyers more than others.
The popular 30-year fixed mortgage rate was hovering in the high -6% range in May. at that level, Buyers with an annual income of $100,000 can afford a home with a maximum price of approximately $341,000, slightly above the national average. But only 39% of homes for sale were listed at or below that price point in May. According to a new report on Thursday From Realtor.com with the National Association of Realtors.
In a market with balanced supply and demand, 64% of homes should be affordable for buyers who earn $100,000 a year, given that population size. As a result, there is currently a shortage of about 285,000 of those listings on the market.
Just five years ago, those same earners could afford two-thirds of homes for sale. Home prices and mortgage rates were very low.
A shortage of affordable homes heated up competition in the market this spring, reversing the slump in home prices that began last summer.
“It’s almost a tale of two cities where we have homes under $500,000, they’re selling absolutely incredibly fast. Under $350,000 and $400,000, there are many offers,” said Noa, a real estate agent in Las Vegas. Herrera said during an open house. mid May. “Over $500,000, it slows down a bit.”
At the higher price range, there are too many homes for sale for the number of Americans who can afford them. In fact, for every home that lists above $680,000, there is a shortage in the market. Double homes under $341,000.
Realtor.com’s chief economist said, “High housing costs and a shortage of available homes continue to present budget challenges for many potential buyers, and this potentially keeps some buyers in the rental market or on the sidelines and delays their purchase.” Danielle Hale.
The costlier current home market is prompting more buyers to opt for new construction, which ironically used to come at a price premium. Homebuilders are offering incentives such as buying upgrades or floating mortgage rates. However, they are reducing as builders see more demand and gain more pricing power.
Like everything else in real estate, location is everything. The areas with the greatest shortage of affordable homes are El Paso, Texas; Boise, Idaho; Spokane, Washington; several Florida markets; And of course, Riverside and Los Angeles, California, which are some of the priciest housing markets in the country.
Areas in the Midwest have the highest number of affordable homes. The four cities with the largest supply of affordable homes are all in Ohio. followed by Syracuse, New York; Pittsburgh, Pennsylvania; and St. Louis, Missouri.
The supply situation does not seem to be improving. According to Redfin, new listings of homes for sale in the first week of June fell 25% year over year to the lowest level of any early June.
The lack of new listings has pushed the total number of homes on the market down 5% from the same period a year ago.