In the Reno-Sparks market sales of single family homes in July was 555 units. This is down 17.4% from the 672 that sold in July 2017. In June there were 572 units sold which was down 23.9% from June 2017. The decline in the number of single family homes sold in Reno-Sparks is a direct reflection of supply and demand. We do have buyers looking but often they are unable to find the right home. We have sellers hesitating to list their homes because they aren’t sure where they will go or how they will be able to accomplish a sell-buy in our limited supply market. The Shocket Team works with buyers and sellers to help them understand the market and with strategies to buy or sell. Reno-SparksRealEstate.com
The latest Existing Home Sales Report issued by the National Association of Realtors (NAR) revealed that home sales have decreased for four consecutive months and are at their slowest pace in over two years. This has some industry leaders puzzled considering the fact that the economy is strengthening, unemployment is down, and wages are beginning to rise. This begs the question: “Where are the buyers?”
Actually, agents in the field of most communities are still seeing strong desire from prospective purchasers. They have a list of potential buyers ready to go if the right houses come on the market and they claim it is not a shortage of demand, but is instead a shortage of inventory that is causing the market to soften.
Why is there a shortage of inventory?
You only need to look at the graph below to understand:
New construction sales over the last ten years are far below historic numbers from 1995-2002.
A recent industry report looked at building permits and concluded:
“If construction over the past decade matched historic norms, accounting for population change, the country would have had 2.3 million more single-family home permits.”
That decade of not building enough homes is the primary reason for the concerns about today’s market.
Wait, weren’t we talking about ‘existing’ home sales?
Some may argue that NAR’s sales report deals with existing home sales and not new construction, and they would be correct. However, reports have shown that one of the main reasons why existing homeowners are not selling is because they can’t find homes that meet the needs of their current lifestyles. Historically, the upgrades in a newly constructed home were the answers to those needs.
Over the last decade, however, there were fewer homes built to satisfy this move-up seller. Consequently, there are many homeowners who stayed in their homes for a longer tenure, instead of putting their homes up for sale.
As more new homes are being built, there will be more housing inventory to satisfy current demand which will cause prices to moderate and sales volumes to increase.