by Rylan Stewart
Now that home prices have stabilized and shown consistently year-over-year growth, we have a new topic to worry about: lack of real estate supply on the market.
With just 1.82 million existing homes on the market in December, the U.S. has the fewest properties for sale since 2005 ? representing 4.4 months of supply (at current sales pace).
As a result, existing home sales declined in December by 1.0 percent, to a seasonally-adjusted 4.94 million pace, according to the National Association of Realtors.
The median sales price rose 0.8 percent to $180,800, which represents a year-over-year improvement of 11.5 percent. The price improvement is partially motivated by increased demand amidst declining supply.
We would expect for new home sales to improve as construction activity increases. The new home sales report will come out this Friday (1/25). For now, we don?t think the numbers will prove to hamper continued improvement of the real estate market. We expect that given time, the market will correct itself. With prices improving and demand on the rise, we would expect for investors and home homeowners to ramp up property sales (and fetching better prices), while home builders have more incentive to invest in construction projects.
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