For years national housing inventory has been falling, but a report released recently by Trulia’s Inventory and Price Watch suggests that this trend is slowing in much of the country and in certain markets beginning to reverse itself.
According to the report, the supply of homes for sale nationwide decreased by just 2.5 percent in Q3 of 2018—its lowest annual drop since 2015—and in pricier markets has actually begun to increase. The national inventory on entry-level homes fell less than 1 percent in the last year, and trade-up inventory has actually improved by a little more than half a percent. This increase in supply has been most striking in California, where six out of 10 metro areas with the highest annual inventory growth are located. Half of all homes available for sale are to be found in these higher-end markets.
The report found, however, that housing affordability still continues to be a problem for potential homebuyers, with declines seen nationwide. This affordability problem is especially felt by those looking to enter the market for the first time and shoppers interested in mid-level or trade-up homes. According to the national average, a family seeking to purchase an entry-level home is likely to spend just over 25 percent of their income to secure a mortgage, and in pricier cities like San Francisco and San Jose the same buyers are likely to spend more than 100 percent of their income in order to purchase a home.
In fact, according to the report, affordability for those looking to enter the market for the first time has dropped to its greatest low since Trulia began tracking these metrics in 2012.
Even so, the data presented by this report would appear to be a good sign for those in the market to purchase a home in general, indicating buyers discouraged by scant inventory have reason to hope the housing market overall is improving. For more information, click here.