For Sellers
A Look at Housing Supply and What It Means for Sellers
One of the hottest topics of conversation in today’s real estate market is the shortage of available homes. Simply put, there are many more potential buyers than there are homes for sale. As a seller, you’ve likely heard that low supply is good news for you. It means your house will get more attention, and likely, more offers. But as life begins to return to normal, you may be wondering if that’s something that will change.
While it may be tempting to blame the pandemic for the current inventory shortage, the pandemic can’t take all the credit. While it did make some sellers hold off on listing their houses over the past year, the truth is the low supply of homes was years in the making. Let’s take a look at the root cause and what the future holds to uncover why now is still a great time to sell.
Where Did the Shortage Come From?
It’s not just today’s high buyer demand. Our low supply goes hand-in-hand with the number of new homes built over the past decades. According to Sam Khater, VP and Chief Economist at Freddie Mac:
“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”
Data in a recent report from the National Association of Realtors (NAR) tells the same story. New home construction has been lagging behind the norm for quite some time. Historically, builders completed an average of 1.5 million new housing units per year. However, since the housing bubble in 2008, the level of new home construction has fallen off (see graph below):
The same NAR report elaborates on the impact of this below-average pace of construction:
“. . . the underbuilding gap in the U.S. totaled more than 5.5 million housing units in the last 20 years.”
“Looking ahead, in order to fill an underbuilding gap of approximately 5.5 million housing units during the next 10 years, while accounting for historical growth, new construction would need to accelerate to a pace that is well above the current trend, to more than 2 million housing units per year. . . .”
That means if we build even more new houses than the norm every year, it’ll still take a decade to close the underbuilding gap contributing to today’s supply-and-demand mix. Does that mean today’s ultimate sellers’ market is here to stay?
We’re already starting to see an increase in new home construction, which is great news. But newly built homes can’t bridge the supply gap we’re facing right now on their own. In the State of the Nation’s Housing 2021 Report, the Joint Center for Housing Studies of Harvard University (JCHS) says:
“…Although part of the answer to the nation’s housing shortage, new construction can only do so much to ease short-term supply constraints. To meet today’s strong demand, more existing single-family homes must come on the market.”
Early Indicators Show More Existing-Home Inventory Is on Its Way
When we look at existing homes, the latest reports signal that housing supply is growing gradually month-over-month. This uptick in existing homes for sale shows things are beginning to shift. Based on recent data, Odeta Kushi, Deputy Chief Economist at First American, has this to say:
“It looks like existing inventory is starting to inch up, which is good news for a housing market parched for more supply.”
Lawrence Yun, Chief Economist at NAR, echoes that sentiment:
“As the inventory is beginning to pick up ever so modestly, we are still facing a housing shortage, but we may have turned a corner.”
So, what does all of this mean for you? Just because life is starting to return to normal, it doesn’t mean you missed out on the best time to sell. It’s not too late to take advantage of today’s sellers’ market and use rising equity and low interest rates to make your next move.
Bottom Line
It’s still a great time to sell. Even though housing supply is starting to trend up, it’s still hovering near historic lows. Let’s connect to discuss how you can list your house now and use the inventory shortage to get the best possible terms for you.
Believe it or not, there are clear signs buyer interest is heating up again.
Let’s talk about what’s really going on behind the scenes, and why the housing market might not be as quiet out there as it seems.
Buyers Are Looking, and Search Trends Prove It
One of the clearest ways to measure what people are thinking about is to look at what they’re searching for online. And according to Google Trends, searches for phrases like “home for sale” have been climbing steadily this year.
The graph below shows an index of two common homebuyer search phrases and how popular they were on Google over the past two years. The higher the line goes, the more popular that phrase was. A 100 on the graph shows the most popular time for each phrase:
Here’s what really stands out in this data. Both phrases have been trending up overall this year, and they hit a recent high in mid-July. That’s a pretty strong sign that curiosity (and maybe even interest) in buying a home is improving.
That kind of momentum means something. Despite high mortgage rates and home prices, buyers haven’t given up. They’re still watching the market. They’re still browsing. And many are just waiting for the right opportunity to act. Maybe your house is exactly what they’re looking for. But you’ll never know if it’s not listed yet.
Now, this doesn’t mean demand is going to surge like it did during the pandemic. It just means some buyers are deciding they can’t wait any longer. And those are exactly the kind of buyers you want. Motivated. Eager. Ready to move when the right house comes along.
So, if you’re holding off on selling because you’re not sure if the demand is there, this data suggests it might be time to rethink your plans. Because while it’s not 2021-level demand, it doesn’t need to be. You don’t need ten offers to sell your home. You just need the right buyer.
And that buyer may be searching for a house like yours right now.
Bottom Line
If you’ve been thinking, “I’ll sell once buyers come back,” you might want to take another look. Online search trends show they’re already interested.
What would make you feel confident putting your house on the market this year? Connect with a local real estate agent to talk through it.
Cutting out the agent might seem like a smart way to save when you sell your house. But here’s the hard truth.
Last year, homes that sold with an agent went for almost 15% more than those that sold without one.
That gap is pretty hard to ignore. And with more homes on the market to compete with right now, selling on your own is a mistake that’s going to cost you.
This Isn’t the Market for DIY Selling
A few years ago, you might’ve gotten away with a “For Sale By Owner” (FSBO) sign in your yard, navigating the process on your own. That’s because homes were flying off the market and buyers were pulling out all the stops. But that’s just not the case anymore. With more inventory than we’ve seen in years, we’re not in a “list it and they will come” market anymore. You need professional expertise.
A yard sign and some photos you take on your own won’t cut it.
Right now, the housing market is getting back to what most would consider a more normal balance of buyers and sellers, and that really changes the game. According to Realtor.com, the latest number of listings for sale was the highest it’s been in any month of July since 2019 (see graph below):
And while inventory growth is going to vary by local market, nationally, this graph shows the number of homes for sale is inching back toward normal.
With more listings available, that means buyers can be more selective. They’ll compare your home to others on price, condition, photos, location, and more. If yours doesn’t stand out, it will get skipped over.
More Inventory = More Competition for You
Selling today requires the latest pricing strategy, expert prep work, professional marketing, and strong negotiation skills. And if you’re not bringing all of that to the table, chances are, you’re going to feel it in your bottom line.
More Homeowners Are Turning To the Pros
That’s why even more home sellers are working with agents today. Data from the National Association of Realtors (NAR) shows a record-low percentage of homeowners sold without an agent last year. And the few sellers who tried to sell on their own realized their mistake pretty quickly.
According to Zillow, 21% of homeowners ended up hiring an agent anyway after struggling to sell on their own.
So, why take the risk? With a local pro, you’ll have:
- Pricing precision to attract buyers and maximize your return
- Expert staging and presentation advice to highlight your home’s best features
- Pro-level marketing, including the best exposure and access to buyer networks you can’t reach on your own
- Skilled negotiation to evaluate offers and navigate inspections, protecting your bottom line
- Local market expertise that helps your listing stand out based on what inventory looks like in your area
An agent’s expertise isn’t optional anymore. It’s essential.
Bottom Line
In a market with more listings and pickier buyers, many sellers who try to sell on their own end up working with an agent anyway. So why not start there?
Connect with an agent so you have a pro who knows exactly what it takes to sell your house in today’s market, for the best possible price, without leaving money on the table.
Reach out to an agent if you want a professional assessment on what your house could sell for today.
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