Tight Inventory Keeps Buyers on Their Toes
May and June may have brought a seasonal surge of new listings to the market, but buyers are still feeling the constraints of an obstinately limited inventory. Regionwide, listing supply is just 44% of what it was in 2019. With so much pent-up demand, listings are selling very quickly, and buyers are hard-pressed to find any price relief.
Despite several counties in Northern Virginia experiencing slight year-over-year price drops, prices are still about 30% higher than they were before the pandemic. For example, at $710,000 the median sales price in Fairfax County slid –0.8% year-over-year. But, when compared to pre-pandemic numbers, the median sales price is still +29%, or $161,000 higher than it was in 2019.
What’s Going on with New Construction?
Housing is still the largest contributor to inflation in the United States. Prices keep climbing as the supply of listings on the market cannot keep up with the large buyer pool. More than 50% of listings in the Mid-Atlantic received multiple offers in May, and most new listings accepted an offer in 6 days or fewer.
There is good news: new home sales, building permits, and housing starts are on the up and up. US home building climbed 21.7% from April of this year, far beyond the predictions of the Census Bureau, which expected a –0.1% decline. Since many current homeowners are unwilling to sell and lose their low-interest mortgage rates, new construction homes will add desperately needed inventory to the market.
This bodes well for renters as well: built-for-rent single family housing starts are on the rise. The US saw 81,000 single family home housing starts in 2022, up from 60,000 in 2021. These homes will help ease rental prices while also offering more living space to renters than a townhome or condo would. Built-for-rent single family housing starts made up 8% of the market in 2022, up from 5% the year prior.
What’s in Store for the Housing Market this Summer?
There is some hope that, as the economy stabilizes, a decline in mortgage rates will entice homeowners to sell, bringing much-needed inventory to the market. With less than a month’s supply of available listings in most localities in the DC Metro area, the lack of inventory continues to be the biggest obstacle for prospective home buyers. However, experts predict that prices will remain stable throughout the summer, as lack of available listings keeps the market competitive.
