According to the company, the U.S. median listing price reached its annual peak earlier than expected thanks to a mismatch of available inventory and buyer demand.
This discrepancy has led the company to warn of an impending market shift that could affect homebuyers well into next year.
“It was only 18 months ago that the number of homes for sale hit its lowest level in recorded history and sparked the fiercest competition among buyers we’ve ever seen. If the trend we’re seeing continues, overall inventory could near record lows by early next year,” Realtor.com Chief Economist Danielle Hale said. “So far there’s been a lackluster response to low mortgage rates, but if they do spark fresh buyer interest later in the year, U.S. inventory could set new record lows this winter.”
According to the company, in just a few months homebuyers could experience a decline in the number of homes for sale, which could lead to the return of bidding wars, stronger price appreciation and quicker home sales.
“The slowing of inventory gains first appeared in 2019 with a decline from 6.4% growth in January to 5.8% in February,” Realtor.com writes. “It continued throughout the spring with 4.4% growth in both March and April 2.9% in May and now 2.8% in June.”
As of now, 40,000 new listings have been added to the market, but this total has the potential to flatten over the next three months and could hit its first decline in October 2019, according to the company.
Realtor.com attributes this slowdown to the fact that newly listed homes have either declined or reported lackluster growth throughout the year.
Hale said although it’s hard to determine why people aren’t putting their homes on the market, she expects it’s likely a combination of sliding consumer confidence, rate-lock, and the fact that older generations are choosing to age in place.
The analysis revealed that seniors born after 1931 are staying in their homes longer than previous generations, shutting many first-time buyers, who happen to be Millennials, out of the market.
In fact, the study indicates that seniors held 1.6 million houses back from the market in 2018 – responsible for a significant portion of the 2.5 million shortage in housing units that has impacted the market.
“The amount of homes retained by seniors is likely to grow as both the number of seniors increases and the barriers to staying in place are reduced,” the study concluded. “This highlights the importance of addressing barriers to the production of new housing supply to accommodate long-term housing demand.”