The U.S. housing market is moving rapidly, with buyers clamouring for larger, more spacious homes. However, this surge in demand has caused a problem: there simply aren’t enough new houses for sale to satisfy the demand. New listings saw a 21.8% year-on-year reduction in early April. With a lack of new houses hitting the market, properties are being snapped up at lightning speed.
It’s thought that many would-be sellers are choosing to hold on to their existing deals due to rising interest rates on mortgages, and are therefore staying in current properties rather than entering the real estate market.
The lack of new houses for sale has created a highly competitive environment, where buyers need to act quickly and decisively.
A Need for Speed
According to a recent report by Mansion Global, the lack of new listings has left U.S. homebuyers eager to secure properties at an unprecedented speed. The combination of low inventory and high demand has resulted in homes spending less time on the market than ever before, with buyers making swift decisions and often engaging in bidding wars.
Almost 50% of homes entering into contract are being secured within a mere two weeks, according to the report. This figure has risen from approximately 25% at the beginning of the year, representing a remarkably rapid increase from the winter months.
Challenges for First-Time Buyers
First-time homebuyers face an uphill battle in this market. The scarcity of affordable entry-level homes is leaving many struggling to find suitable properties within their budget.
However, it’s not all doom and gloom. Many first-time buyers can move relatively quickly to secure their dream property when it does become available, giving them some advantage over other buyers.
Increased Mortgage Rates
While much has been made of how rising interest rates on mortgages are affecting would-be buyers, it could be argued that there is even more potential to lose for those in existing properties if they choose to sell.
While there are now better options around than this time last year—average 30-year rates dropped to 6.28% at the start of April— those on longer deals may take a “wait and see” approach when it comes to refinancing. And that means that they are likely to stay in their homes for longer, putting more pressure on an already low-stocked market.
The current U.S. housing market is undoubtedly a challenging landscape for homebuyers. With low inventory and high demand, securing a property requires quick action and an adaptable plan. However, as interest rates hopefully continue to drop, many vendors and sellers alike will find new confidence in the real estate market and the number of new homes for sale will start to increase.
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