As media headlines speculate about the possibility of a housing market correction in the next 24 months, buyers and sellers are adjusting their perspectives. Existing home sales are down slightly over a year ago, indicating the market is shifting from a seller’s market, and into a buyer’s market. According to the National Association of Realtors (NAR) Chief Economist Lawrence Yun, “With inventory stabilizing and modestly rising, buyers appear to be ready to step back into the market.”
What Might Bring Buyers Back?
In many markets, home sales have not so much corrected as simply plateaued. That and signs of rising interest rates could both be reasons why Yun expects buyers to begin buying again. In addition, there is a higher rate of inventory available on a national level. Total housing inventory registers at 1.92 million homes—up from 1.87 million last year—and unsold inventory is at a 4.3-month supply, up from 4.1 a year ago.
Even with these numbers, Yun believes the market is far from healthy. “New-home construction is not keeping up to satisfy demand.” To propel sales, he suggested more moderately priced entry-level homes.
Where are the Investors?
Interestingly, on a national level, investor activity (as measured by all-cash transaction volumes) has remained largely unchanged. In August 2018, all-cash transactions made 20 percent of total real estate transactions. This was the same as a year ago. About one in every eight homes were purchased by individual investors, down from about one in every six last year. August also posted distressed sales volumes of three percent in August, the lowest volume since 2008.