Breaking through a year of steady growth, U.S. housing inventory took a tumble in August.
According to realtor.com’s latest housing trend report, housing inventory fell 1.8 percent year-over-year last month. The median listing price, meanwhile, is at $309,000 — 4.9 percent higher than last year but an 1.8 percent drop from July.
Such a steep drop has not been seen since July to August 2012. It is, in part, caused by an uncertain market — according to realtor.com, some are using the currently low interest rates to snap up homes while others are worried about a recession and holding off on selling.
“On the one hand, lower interest rates have given buyers more purchasing power, which is contributing to August’s decline in national inventory,” George Ratiu, senior economist for realtor.com, in a statement. “However, concerns over trade wars and cutbacks in corporate spending are causing some buyers to postpone their search. This is contributing to both the slow down in prices, as well as the inventory decline, as buyers stay put in their current homes.”
Properties also spent a median of 62 days on the market — four days longer than last month and three days longer than they did last year. It is, according to Ratiu, still too early to tell whether such a drop will affect demand throughout the long term. It all depends on the market. According to an earlier realtor.com report, 56 percent of homeshoppers said that they would pause their home search if a recession hits.
“These strong but opposing forces make it more difficult to predict what will happen in the second half of this year,” Ratiu said. “If the headwinds of economic uncertainty intensify, it could prompt a decrease in buyer demand and shift housing inventory’s current trajectory. But if increased purchasing power prevails, we could see even more inventory declines and intensified competition between buyers.”