Home inventory is slowly growing, but the gains could be better
Housing inventory has grown annually for three straight months following four years of declines, but the gains are small and uneven, according to Zillow.
While home inventory only ticked up 0.4% year-over-year in November, this same time last year supply posted an annual decline of 9.1%.
As tight inventory shot up home prices and created bidding wars for buyers, any sign of relief for house shoppers, no matter how small, should be a good one. Limited supply has created affordability hurdles and dissuaded homeowners from selling in fear of not finding another property to purchase.
Still, inventory levels sit much lower than where they were five years ago, and slight growth isn't enough to make a significant impact on the housing market.
"Unfortunately, the small recent gains are not nearly enough to fully erase the existing deficit, nor are they evenly distributed — there are roughly twice as many homes available for sale in the higher reaches of the market than there are at the lower, more competitive end," Aaron Terrazas, Zillow's senior economist, said in a press release.
"Rather than calling this a true inventory recovery, it's probably more accurate to say that inventory levels are no longer in a free fall and are currently bumping along the bottom. And unfortunately, it's looking increasingly unlikely that we'll see a meaningful upward surge in inventory any time soon."
The creation of new inventory has been sluggish as homebuilders battle a number of their own challenges, including high costs for land and lumber, and regulatory burdens. Home sellers may also be hesitant to put their homes on the market since they may have to buy a house at a higher rate as mortgage rates are still on the rise.