Home sales fell again in December, marking the 11th straight month of decline. National Association of Realtors (NAR)House prices continue to rise, but what worries many investors and observers is the lack of inventory.
The NAR report showed total housing stock at 970,000 units at the end of December, below 1 million units, down 13.4% from November and continuing 2.9 months of supply at the current sales pace. This number is down from his 3.3-month supply in November.
“December was an even more difficult month for buyers, who continue to face limited inventories and high mortgage rates,” said Lawrence Yuen, chief economist at NAR. Jack McDowell Jr. of Palisades Groupultimately told Benzinga, “we need more products on the market.”
Based in Austin, Texas, Palisades is an alternative asset manager in the global mortgage market. McDowell said he is currently not buying any stake in the property.
“We’re more concerned with credit. One of the things I’m concerned about is there’s the affordability issue, driving homebuyers into the rental market,” he said. “By 2024 and 2025, pent-up demand, either in existing or new home construction, will return which could be released into a market in short supply unless more inventory is brought to market. That puts pressure on house prices and we find ourselves in an inflationary market.”
While some might think the latest numbers are showing a drop in homebuyer demand, McDowell says people should pay more attention to inventory. Inventory shortages sparked a buyer bidding war in early 2022, when interest rates were less than half what they are today.
“Inventory is below 1 million, back to where it was in March 2022,” Mcdowell said. “When you look at the numbers, you can see that it’s a supply side issue. Plus, with interest rates at his 6.5% right now, no one is going to sell their home.”
The price will not go down. Despite many conflicting forecasts for 2022, the December NAR report found that the median existing home price in December for all home types was $366,900, up 2.3% from December 2021. Prices are rising in all regions of the United States. The numbers marked the 130th straight month of year-over-year gains, making it the longest-running home price rise in history.
With prices still high and unsold stock currently stuck at a supply rate of 2.9 months, McDowell needs to see some pretty dramatic changes before investors decide to dive back into the market. says there is.
“We should be five or six months old,” he said. “From an investor’s perspective, my view is that supply and demand must be in equilibrium before things can change.”
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