Monday Market Update: The Why Behind ‘Prices Up, Sales Down’
If you have wondered why sales numbers are dropping when the market is ‘on fire’ – find the answer here.
You are seeing this trend locally and the national data is following suit; both FHFA and Case Shiller are reporting historic highs with regards to home price gains. In fact, FHFA is stating that year-over-year price gains are the largest they have ever been according to their records.
Yet on the flip side, pending home sales reported on April 2nd indicate a drop of 10% - a figure more indicative of the pre-pandemic housing market. This dichotomy can only be explained by one word: INVENTORY.
The slow in home sales is not linked to any lack of demand – as days on market are dropping while home prices are surging. The lack of sales is simply a lack of supply. Mortgage News Daily explains that “…In addition to the obvious limitations it places on home sales, tight inventory can also force prices up as more buyers compete for fewer properties. It's never been tighter than it is right now.”
Limited inventory also means that price gains will hold and likely continue even as rates rise. For a greater explanation on the impact of rates on housing demand, check out the graphs at the end of the article
‘Who's Lying About The Housing Market?’.
All my best,
Bobbi Decker
DRE#00607999
Broker Associate
650.346.5352 cell
650.577.3127 efax
www.bobbidecker.com
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