(NBC) – If you’re hoping to take advantage of lower interest rates in order to buy a new home this season, you’re not alone.
Demand for housing is strong across the nation but supply is critically low and getting lower.
The supply of homes for sale is falling across the nation, as demand soars and attractive mortgage rates pull buyers off the sidelines.
At the end of October, inventory nationwide fell to a 3.9-month supply, according to the realtors.
That’s how long it would take to sell all of the nearly 2 million homes for sale at the current sales pace.
A healthy market, balanced between buyers and sellers, is considered to be a 6-month supply.
“What we did see over the past 18 months was some inventory rise because there was reduced activity on the demand side, but more recently with low interest rates, we have people coming back into the housing market and that’s pulled down inventory even lower,” said Gregory Daco of Oxford Economics.
But all real estate is local, and some markets are seeing supply falling more dramatically, and it’s not just the California markets.
Seattle, Phoenix, Cincinnati, Pittsburgh, St. Louis, Kansas City, and D.C. are all down double digit percentages in supply compared to a year ago.
The supply is worst on the low end, down over 6% from a year ago for homes priced between $100,000 and $250,000, according to the realtors.
Supply is down 15% for homes priced below $100,000. In the move-up market, supply is rising, but barely at around 1% annually.
“In the current environment where costs are higher for labor, for lumber and for lots, you’re not going to see builders edge in that much into the lower end of the market,” said Daco.
All of this in the fall, when supplies usually rise, is an indication that things may only get worse come spring.
With the drop in supply numbers across the nation, home prices are starting to heat up again, and as demand continues to outpace suppl.. That trend is expected to continue into the new year.
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