The National Association of Realtors (NAR) notes that existing home inventory for sale fell 12.3 percent in Dec., 2015 to 1.79 million homes, 3.8 percent lower than one year ago. In the meantime, unsold inventory is at a 3.9 month supply at the current sales pace, a drop from 5.1 months in Nov., and the lowest since Jan. 2005 when the pace was at 3.6 months.
Just as many construction workers left the industry during the downturn, so too did developers who have been cautious in their approach, and financially constrained in broad lot development. Additionally, the high cost of buildable lots has been working against the recovery.
The report says while some of the larger public builders plan to offer more affordable homes to first-time buyers, and are considering subdivisions in outlying areas, more meaningful inventory this year than in 2015 is not anticipated.
As measured by the Census Bureau, new home sales prices will rise 2.0%–2.5% this year. Fitch adds there will be some increase in sales of starter homes.
As MHProNews understands it, lower inventory of homes for sale puts upward pressure on home prices, and when combined with wages rising slower than the price of homes, putting home prices out of reach of many would-be first-time homebuyers. ##
(Image credit: housingwire-home price increases)
