We’ve been predicting it for many months in Tucson and we’ve been proven correct. Locally resale home inventory is down significantly year-over-year and many Tucson zip codes have less than 2 months of inventory. Nationally the same pattern is emerging.
Home buyers are signing few contracts not just because of their concerns over the economy, but there just are not as many homes to choose from. The pending home sales from the National Association of REALTORS fell 1.4% from May. It is up 9.5% from a year ago. Signed purchase contracts for existing homes (aka resale not new construction) are a bellweather indicator for housing market health.
“Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities,” said Lawrence Yun, NAR’s chief economist. He went on to say, “We’ve been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time home buyers and investors.”
When the natural law of supply and demand is applied to the inventory shortage the predictable outcome is increasing home prices. Price is just one leg of the housing triad. The cost of borrowing money and the terms under which a buyer will purchase the home being the other 2. The cost of borrowing money remains artificially low.