Analysts Fear Housing Falter

Posted: August 19th, 2015 by Brad

Inventory shortages could disrupt momentum on the U.S. housing market and expectations for continued economic expansion, according to some analysts.

A recent report by AP economics writer identifies inventory shortages as the main problem. “Robust demand has failed to draw many sellers into the market,” Boak wrote, adding few in the industry foresee a surge of new listings.  

For the first time since the start of the Great Recession in 2007, the U.S. economy was deriving strength from housing.

Other pressures could also slow sales, according to the AP report. Among these are steadily rising home prices, builders’ shifting focus to apartment construction instead of single-family homes, and rising mortgage rates.

Figures from the National Association of REALTORS® show sales of existing homes hit an annual rate of 5.49 million in June. That pace was last achieved before the recession began. Sales of new homes have surged 21 percent through the first half of 2015.

Despite stronger sales, current owners don’t seem to be inclined to list their homes. The combination of lagging listings and subpar construction of new homes is pushing prices upward. When coupled with high mortgage rates (even if only a moderate increase) would-be buyers are becoming skittish.

Interest rates are having an effect, one economist commented to the AP reporter. “It’s making buyers a bit more conservative,” he explained.

The founder of Weiss Residential Research believes a contributing factor for the shortage of available homes is because many current owners can’t find affordable homes themselves so they’re having a hard time moving up.

Posted In: Blog, Market Economics

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