close
close

Little chance of inventory explosion this year

Little chance of inventory explosion this year

ATTOM’s semi-annual report looks at the development of housing supply and what we can expect in terms of house prices and the number of forced sales.

Housing supply is showing signs of recovery, but don’t expect supply to explode anytime soon.

That’s one of the key takeaways from ATTOM’s semi-annual review of the housing market. The June 28 webinar featured analysis from Mike Simonsen, founder of Altos Research, and Daren Blomquist, vice president at Auction.com.

Simonsen said there are no indications of a major flood of sellers coming, as mortgage rates remain low and unemployment rates are relatively low.

“It also tells us that home sales will remain limited until there are more sellers,” Simonsen said.

Simonsen expects supply to continue to rise in the short term until late fall, when seasonal pressure hits and homes are taken off the market for the holidays.

One component that could disrupt the housing inventory cycle is mortgage rates: if rates fall significantly, inventory will also fall because more buyers enter the market. If rates rise, inventory will also rise because buyers stay on the sidelines.

What else can industry and consumers expect in the second half of the year?

Sales prices: Home prices are expected to level off later this summer and then follow seasonal declines, but Simonsen said it will be more “compressed” growth compared to previous years, especially if interest rates remain high. The data does not yet show downward pressure leading to significant nationwide declines in home prices.

Price reductions: The share of homes with price reductions is expected to peak before the holidays, possibly around 40%. The current share, which Altos estimates at 36.4%, is higher than in previous years, Simonsen said.

Distressed properties: Foreclosures and delinquencies are still well below pre-pandemic levels, but they’re up slightly. In a survey of clients, Blomquist said rising insurance and property taxes are becoming the biggest risk factors for an increase in distressed properties. Consumer debt and rising unemployment were also top concerns.