The number of homes on the market across the United States continues to lag, with 3.3 months of inventory as of August, the lowest level ever at this time of year, according to the National Association of Realtors (NAR). It’s unfamiliar territory for people in the real estate industry, they say.
Among those is broker Lisa Briganti, who has been in the real estate industry for more than three decades.
“I’ve certainly never seen this before,“ Ms. Briganti, who owns Briganti Properties in South Carolina, told The Epoch Times. ”People want to sell their homes, but they’re not going to because their current [mortgage] interest rate is around 3 percent. So they’re staying put.”
She said there are only four reasons that people are considering moving today: “divorce or marriage, having kids, death, or job relocation.”
Many also believe that the housing market will remain inventory-deprived until the Federal Reserve begins cutting rates, which some economists have said might happen in the second half of 2024. The latest decision by the Fed kept the central bank’s benchmark rate in a range between 5.25 and 5.5 percent, the highest in some 22 years.
One belief that isn’t debated is that the level of home availability across the country is unprecedented.
“If we look at our data coming out of the pandemic, we were concerned about 2 million homes in the marketplace. Today, we have 1 million,” Jessica Lautz, NAR’s deputy chief economist and vice president of research, told The Epoch Times.
‘The Lock-In Effect Is a Real Thing’
Fed Chairman Jerome Powell pointed out that rate increases have made it nearly impossible for people to move out of their current homes. Referred to as so-called lock-in rates, existing homeowners have contributed to stagnation in the mortgage lending market and the nation’s broader housing woes by staying put.Although the Fed has raised interest rates 11 times over a period of a year and a half, Mr. Powell said he doesn’t regret the central bank’s monetary policy moves that played a significant role in the situation.
“The lock-in effect is a real thing,“ Ms. Lautz said. ”Many homeowners can’t afford to move and buy the exact same home, and they’ve been priced out of the market.”
She noted that real estate agents usually count on one group of buyers remaining on the sidelines.
“Every market is different, but on a nationwide sales basis, we see first-time buyers at historic lows,” Ms. Lautz said.
She noted that many potential first-time buyers have moved back in with their parents to save enough money for a down payment.
Ms. Briganti said her situation in Greenville, South Carolina—a popular destination for northerners to move to during the COVID-19 pandemic, and the home of a burgeoning automotive market with Michelin’s U.S. headquarters and a BMW plant in nearby Spartanburg, South Carolina—isn’t unlike that in the rest of the country when it comes to clients.
“I have a pool of buyers without enough houses to show them. Many are first-time buyers or those relocating here who want to buy. It used to be for us, you’d have a sale and then a purchase,” she said.
“Now, if you have a sale, they’re probably moving out of state.”
According to the NAR, nationwide home prices have jumped by 0.6 percent, with the median price of a home in the United States, not including new construction, at $410,200, representing the second-highest level since it began tracking those data, topped only by home prices in 2022.
Zillow estimates that home values have increased by $2.6 trillion in the past year.
The Fed has scheduled two more meetings before the end of the year, and the residential and commercial real estate industries are cautioning regulators on any further rate increases.
