Low inventory pressured as millennials grow up

Demand for housing from millennials reaching important life stages is creating a dilemma for the US housing market, First American Financial says.
 

Its chief economist says demand will become more robust as younger Americans marry and have children but the market is underperforming its potential due to lack of supply.
 

“The low inventory of homes for sale is preventing the housing market from reaching its potential and pressuring prices higher. Increasing shortages of homes for sale is a growing problem for potential home buyers, especially potential first-time home buyers today, as it causes affordability to decline,” Mark Fleming said.
 

First American’s Potential Home Sales Model considers what a healthy market should look like based on the economic, demographic, and housing market environments and using historical data.
 

Potential existing home sales for May 2017 increased 1.8% month-over-month (98,000 sales) to a seasonally-adjusted annualized rate of 5.72 million units.
 

The model calculates that the market is underperforming by 3.8% or 218,000 sales.
 

“As more and more Millennials marry and have children, among the strongest determinants for the desire to be a homeowner, demand for housing will remain robust. However, the housing market faces a dilemma that is restricting the inventory of homes for sale,” said Fleming.