New Home Purchases up 30.8% in April

Home purchases were up -- but that doesn't tell the whole story.

Spring is typically a popular time to buy a home, and it's generally when an influx of properties hit the market. The Mortgage Bankers Association reports that mortgage applications for new home purchases were up 30.8% in April of 2021 compared to the previous year. However, compared to March of 2021, mortgage applications decreased by 9%. And the reason boils down not to a lack of demand, but to a lack of inventory.

There just aren't enough homes to buy

In late April, Black Knight reported that there were 40% fewer homes on the market compared to the same time period one year prior. All told, that's left the market short an estimated 125,000 homes for buyers to purchase.

A glaring lack of inventory is causing a number of problems on top of limiting buyers' selection. First, combined with low mortgage rates, it's driving home prices up. Secondly, it's creating a situation where the limited number of homes that are on the market are winding up subject to bidding wars. And while bidding wars are a great thing for sellers, they can leave buyers busting their budgets as they try to get an offer accepted.

Should you attempt to buy a home today?

If you've been searching for a new home, you may be growing increasingly frustrated as you attempt to navigate a market that's extraordinarily tight. As such, at this point in time, it could pay to put your home search on hold and wait for inventory to open up.

The usual uptick of housing inventory that occurs during the spring just hasn't happened this year. And the pandemic could be to blame. At a time when there's still a world of economic uncertainty, many sellers have held off on listing their homes.

Health concerns are a factor, too. Most people who purchase a home don't want to do so based on a virtual tour alone. Rather, they need to come in and physically check out different properties. But some homeowners may not yet be comfortable with the idea of having strangers traipsing around -- especially those who are not yet fully vaccinated against COVID-19. As such, this spring's housing market is a lot emptier than normal markets.

Things could change, however, as the pandemic and the economy improve. Once that happens, housing inventory is likely to increase. If you sit tight for a few months, you might spare yourself some serious aggravation.

Now you may be thinking -- but what about interest rates? The good news is that mortgage rates are likely to stay low for quite some time, so if you wait a few months to purchase a home, you won't necessarily get stuck with a rate that's much higher than what you'd pay today.

While home purchases may have risen in April compared to a year prior, it's not shocking that they slumped compared to March. Buying a home last month was no easy feat, and if you've been struggling to find a place of your own, waiting things out may be your best move.