During the COVID-19 pandemic, the severe housing shortage in the United States has impacted the market. However, there is now a turning point, and the national housing inventory will increase by 4% in the first quarter of 2024. A well-known financial blog ZeroHedge reported that it is time to enter the buyer's market, which may suggest a decline in housing prices in 2025.
A new report by Construction Coverage reveals the regions with the largest increase in real estate inventory in the United States. The report points out that the current housing shortage problem (estimated to be between 4 and 7 million homes) can be traced back to before the outbreak of the COVID-19 pandemic. In the ten years after the economic recession, the number of new houses built in the United States was lower than in any decade since the 1960s.
(Source: Twitter)
The report states that the impact of the housing shortage on some regions is more severe than others. Researchers ranked different regions based on the percentage change in the average monthly housing inventory from the first quarter of 2023 to the first quarter of 2024, which is the total number of active listings at the end of each month plus the total number of pending listings.
From a national perspective, US housing inventory decreased from a high of over 2 million homes in 2012 to a low point of about 630,000 homes in early 2022.
The report also adds that over the same period, the supply months dropped from 7.5 months to a historic low of 1.1 months.
It also points out that since early 2022, inventory has rebounded slightly, and throughout the first quarter of 2024, the national inventory of homes for sale hovered around 970,000, an increase of 4.0% year-on-year.
Although inventory has increased, the existing inventory can only sustain the current sales rate for 2.9 months, slightly higher than the 2.8 months of supply in the previous year.
(Source: Construction Coverage)
The report breaks down trends by city and state, finding that as of the first quarter of 2024, the states with the lowest supply levels are concentrated in the Midwest and surrounding areas, such as Kansas with a supply of 1.5 months, and the Northeast including Rhode Island with a supply of 1.8 months.
However, Washington state also has the lowest housing supply level in the country, with a supply of only 1.9 months.
In contrast, several southern states, led by Florida (5.2 months of supply), Hawaii (5.2 months), and Montana (5.1 months), provide significantly more favorable conditions for buyers.
Among the largest cities in the United States, Denver, El Paso, and Dallas had the largest year-on-year increase in housing inventory. In contrast, Las Vegas, Raleigh, and Chicago saw the largest decline in housing inventory.
These data are unlikely to result in a crash like that of 2008, but that does not mean it is not worth paying attention to.
Although signs of a "turnaround" have not yet appeared, the real estate market is so large that it rarely adjusts quickly.
However, it is worth noting that as inventory continues to increase (with mortgage rates now above 7%), the well-known financial blog ZeroHedge warns that this could easily indicate a decline in housing prices in 2025.