Even with more price declines expected, lower-than-normal supply of homes for sale is one reason that economists and market participants say the current housing slump won’t bring the national price collapse that followed the subprime crisis.
The U.S. had a low inventory of homes for sale heading into the pandemic and the number of active listings is still well below pre-pandemic levels.
Home builders have been hampered by supply-chain issues and labor shortages. Most homeowners with mortgages have a current rate below 4%, and many don’t want to give up their current rate and pay a higher rate for a different house. Many homeowners are also sitting on large cushions of equity, which is likely to prevent a big wave of foreclosures and distressed sales.
“Home prices absolutely are going to drop” in many markets, said Matthew Gardner, chief economist at Seattle-based brokerage Windermere Real Estate. But “the only time you see a significant decline in home values is when you see significantly more supply than you do demand, and that is not going to happen.”
Joe Stanich and Cait Peltyszyn started looking to buy a house in northern New Jersey in December, but they were discouraged by the lack of inventory and the persistence of higher borrowing costs.
The couple had an offer accepted on a two-bedroom home this month, but the seller backed out to accept a higher competing bid, Mr. Stanich said.
“It is frustrating,” he said. “Any talk of the market coming back to reality, or at least cooling off, coming down, is not playing out in this area.”
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