By WIll Daniel, Fortune.com
It’s no secret that the U.S. housing market has been blazing in 2022. The average annual rate of U.S. home price appreciation hit a record high of 19.2% in January, and buyers are engaged in bidding wars like never before.
While soaring mortgage rates have caused mortgage applications to dip in recent weeks, it may take time for waning demand to translate to lower prices.
After a decade of underdevelopment, historically low inventory continues to put pressure on the U.S. housing market, but there may be good news on the horizon for prospective home buyers.
A whopping 64% of prospective sellers anticipate placing their homes on the market within the next six months, according to a recent Realtor.com survey. That means more inventory this summer for a market that desperately needs it.
After all, in March, active home listings in the U.S. were down roughly 18.6% compared to a year ago. And the U.S housing market is facing a shortage of nearly 6 million new single-family homes.
Realtor.com’s survey offers a glimmer of hope for first-time buyers, in particular, researchers said. Nearly half of the sellers who said they plan to list their homes by summer’s end in the recent survey are millennials, and 65% expect to list in relatively affordable price ranges, below $500,000.
That could mean a boost in starter home sales over the summer.
“This is welcome news for first-time buyers, who face fierce competition for limited available starter homes,” researchers said.
The real estate market has been especially brutal for first-time homebuyers who are often priced out by investors representing roughly 80% of the market, Redfin’s deputy chief economist Taylor Marr told Fortune.
While many are looking to new builds to find a way into their first home, homebuilders have been struggling to keep pace with demand. Construction starts did jump 22% year-over-year in February, according to census data released in March, but builders are still about 31% below their long-run home per household average, Marr said.
“We're at the lowest level of inventory on record back at least 23 years,“ Marr added. “So housing starts are not quite making that large of a dent in terms of the inventory shortage just yet.”