All markets eventually experience a pause. Many decry the lack of inventory right now, but after a 2-year frenzy of home-buying, was it realistic, regardless of sharply higher interest rates, for the rate of new inventory coming to the market to continue unabated, when in 2020-2022 lots of the available inventory had been around for some time, and lots of it came to market after having been pulled from markets in lackluster 2018-2020?
If we were to average the number of existing home sales over the years 2020, 2021, 2022, and 2023, it comes to 5.22 million. Sharply higher than the approximate 4 million expected to sell this year. In 2018 and 2019 the number was 5.34 million per year. The surge in 2021 to 6.12 million was almost certain to be offset by a correction. Sadly, we expect these things to normalize within a few months, but in reality they take longer.
Remember, by July 2019, inventory of existing home inventory had grown to 1.92 million homes, down, though, from around 3 million in 2010, a recessionary recovery period of over-supply and big unemployment figures. The US GDP growth of 2019 was a rather boring 2.29%, even after big tax cuts: in 2021 it was well over 5%! By 2022, it had reverted back to a boring 2.06% as the mass buyers of the US had spent their savings and stimulus and wealth was re-concentrated amongst a much smaller audience.
By February 2022, inventory had dipped well below 1 million to 850,000. Of course, it did. Now it's up over 1.15 million, that's an increase of 35%! And as we have seen at retail around the globe, it takes a while to replenish inventory. The 2022-2023 pause is temporary too. Sooner or later all markets unlock, including inventory levels. And when inventory levels are low people build more (see rising rental inventory!). Might some institutional investors in single-family homes sell in 2024 to cash out because of political pressure and to boost profits that may come under pressure?
Why? Do I really need to remind anyone why people move? They move. Lots. For hundreds of reasons besides interest rates.
