Tight supply of homes in many markets across the US got even tighter in the fourth quarter of 2017 according to Trulia
Tight supply of homes in many markets across the US got even tighter in the fourth quarter of 2017 according to Trulia.
The listings site’s data shows that there were declines for all sectors, starter homes, trade-ups and premium. Overall, the US housing market saw the steepest fall in inventory since 2013, down 10.3% in the fourth quarter compared to a year earlier.
The decline for starter homes was 19%, trade-ups dropped 11.4%, and premiums were down 5.9%.
The drop in premium homes is of particular concern according to Trulia’s chief economist Ralph McLaughlin.
“While the number of premium homes on the market have seen a sharp fall, they continue to make up a larger share of the for-sale market (53.1%), which spells trouble for first-time homebuyers. Coupled with record-low inventory, saving enough money for a down payment will continue to be their biggest obstacle to homeownership," he said.
Affordability worsens
The tight supply of homes continues to drive prices higher, worsening affordability, especially among first-time buyers.
First-timers will need around 40% of their income to afford a starter home, up 1.7% from a year ago. Trade-up buyers will need 25.8% (up 0.6% from a year ago) and premium buyers will need 14% (up 0.3%).
The year ahead
McLaughlin believes that the current low supply will start to improve in 2018.
“I'm cautiously optimistic that 2018 will be a year for inventory rebound. Not only is American optimism about selling homes at levels not seen since 2014, 16% of homeowners plan to sell a home in the next two years. If we see them follow through, there may finally be an uptick in inventory," he said.
The listings site’s data shows that there were declines for all sectors, starter homes, trade-ups and premium. Overall, the US housing market saw the steepest fall in inventory since 2013, down 10.3% in the fourth quarter compared to a year earlier.
The decline for starter homes was 19%, trade-ups dropped 11.4%, and premiums were down 5.9%.
The drop in premium homes is of particular concern according to Trulia’s chief economist Ralph McLaughlin.
“While the number of premium homes on the market have seen a sharp fall, they continue to make up a larger share of the for-sale market (53.1%), which spells trouble for first-time homebuyers. Coupled with record-low inventory, saving enough money for a down payment will continue to be their biggest obstacle to homeownership," he said.
Affordability worsens
The tight supply of homes continues to drive prices higher, worsening affordability, especially among first-time buyers.
First-timers will need around 40% of their income to afford a starter home, up 1.7% from a year ago. Trade-up buyers will need 25.8% (up 0.6% from a year ago) and premium buyers will need 14% (up 0.3%).
The year ahead
McLaughlin believes that the current low supply will start to improve in 2018.
“I'm cautiously optimistic that 2018 will be a year for inventory rebound. Not only is American optimism about selling homes at levels not seen since 2014, 16% of homeowners plan to sell a home in the next two years. If we see them follow through, there may finally be an uptick in inventory," he said.
