This year’s spring selling season promises to be the toughest for homebuyers in a decade, as rising prices and mortgage rates combine with inventory near 20-year lows.
“We think that 2017 will be the fastest market” since the peak of the last housing boom in 2006, Nela Richardson, a chief economist at Redfin, tells The Wall Street Journal.
So far this year, U.S. homes are selling an average of eight days faster than last year.
It isn’t just hot spots like Seattle and Denver that are seeing scarce supplies of homes for sale but also sleepier locales like Minneapolis, Cleveland and Nashville.
These markets typically are enjoying strong job growth with young first-time buyers looking for homes, but also declining inventories, says Svenja Gudell, chief economist at Zillow.
Economists had predicted the inventory crunch would ease this year, as several years of solid price gains induced more sellers to put homes on the market and homebuilders to break ground on more new homes.
Instead, inventory has tightened as demand has increased rapidly and the pickup in construction has lagged behind. Sellers also have become hesitant to put their homes on the market because rising prices and mortgage rates have made it more expensive to trade up.
What’s more, there is a growing mismatch between an abundance of high-price inventory on the market and increasing demand for starter homes.
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