Nationwide, there were 2.02 million homes listed for sale in October 2016, representing 4.3 months’ supply. The inventory should be 6-to-7 months’ supply for a normal market. As the result, home buyers often find multiple offers on a property they want to buy.
This shortage of inventory is the principal reason why home prices have been outpacing people’s income growth for the past five consecutive years, according to NAR Chief Economist, Lawrence Yun. From 2011 to 2016, the median home price have risen by 42% compared to the median household income gain of only 17%.
The number of new homes built is not enough to accommodate the rise in housing demand. Nearly all home sellers are also home buyers, and thereby not truly providing a net increase to the inventory. What is needed is for home builders to boost construction. Yun predicts that we are in for a housing shortage at least 4 more years.
View NAR Chief Economist, Lawrence Yun’s full article here.