Why the supply of homes for sale is the lowest since 1999
House hunters out this spring will have to pound more and more pavement to find their home sweet home.
The number of for-sale listings fell again in December to the lowest level since 1999, according to the National Association of Realtors. There were just 1.65 million homes for sale at the end of December, which at the current sales pace would take only about 3 ½ months to exhaust. A normal, balanced market has about a six-month supply.
The older edge of the millennial generation is finally looking toward home ownership, but finding nothing but frustration in their neighborhoods.
Tight supply is pushing home prices past their peaks in some markets and well past income growth nationally. Mortgage rates were historically low in 2016, helping to offset the higher prices, but that is not the case this year. Rates are already up significantly since the election and are expected to continue higher. Only a few of the big volume home builders are putting resources into the starter home market.
First-time buyers continue to make up less than a third of the sales market; historically they are usually at about 40 percent. Affordability is weakening, but mortgage credit availability also continues to be difficult.
As rates rise, fewer potential borrowers qualify for the strict debt-to-income levels lenders now require. Some are looking to the Trump administration to loosen regulations on lenders, but that could take time and is unlikely to happen before the spring season.
http://www.cnbc.com/2017/01/24/why-the-supply-of-homes-for-sale-is-the-lowest-since-1999.html