Demand for homes is on the rise and residential properties listed on the market are selling within a span of 69 days. Due to tightened inventory, the number of days a residential property stays on the market has reduced from a year ago.
According to data provided by the National Association of Realtors, the median time a home stays on the market has come down from 98 days in July 2011 to 69 days same time this year. During the peak of housing boom in 2004 and 2005 when the median selling time was four weeks, inventory supplies were averaging 4.3 months.
According to Lawrence Yun, NAR chief economist, low inventory is one reason why homes sell fast
“As inventory has tightened homes have been selling more quickly. A notable shortening of time on market began this spring, and this has created a general balance between home buyers and sellers in much of the country," he said. "This equilibrium is supporting sustained price growth, and homes that are correctly priced tend to sell quickly, while those that aren't often languish on the market.”
The July figures are good for sellers as low inventory means any house with an appropriate price tag will attract quality buyers.
According to a Washington Post report, in July there were 2.4 million previously owned homes for sale, which would take about 6.4 months to exhaust that supply.
“That’s just above the six-month inventory typical in a healthy economy,” the report said.
On the price front, the NAR report forecasts the median existing home price to rise 4.5 to 5 percent this year due to inventory shortfall in the low price ranges.
Construction activity drops
Meanwhile, low construction activity could dampen a stabilizing housing market by escalating housing prices.
“Ironically, if housing construction doesn't pick up to normal levels within two years, supply shortages could be sustained for an extended period and lead to above average appreciation,” Yun said in the statement. “Therefore, any unnecessary hindrance to housing starts, such as excessive local zoning regulations or stringent bank capital rules for construction loans, should be carefully re-examined."
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