U.S. Housing Inventory Is at an All-Time Low

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Talk about it being a tough time to buy.

Key points

  • Housing inventory has been limited since the start of the pandemic.
  • Recently, the number of available homes for sale hit a record low.

Ask anyone who's been trying to buy a home this year, and you'll probably hear a similar story -- there just aren't enough available properties to go around. Sellers have been hesitant to list their homes since the start of the pandemic. And so now, buyers who wish to purchase a home are frequently landing in bidding wars, where they duke it out and keep making higher offers in the hopes of getting one accepted.

Why won't buyers just sit tight and wait things out? Although home prices are up significantly on a national level, right now, mortgage rates are sitting at very attractive levels. But we don't know when rates will begin to climb and how rapidly they'll do so. Many buyers want to move sooner rather than later.

That may prove challenging as the new year approaches, though. For the week ending November 28, the number of active home listings reached an all-time low, reports Redfin. That week, the number of available listings was 23% lower than it was in 2020 and 42% lower than it was in 2019.

When will housing inventory increase?

A big reason sellers have sat tight on listing their homes boils down to economic and pandemic-related uncertainty. Unfortunately, both factors are still very much in play as we go into 2022.

While the economy is in a stronger place right now than it was a year ago, at least from an unemployment perspective, some sellers might still fear another wave of shutdowns and an ensuing downturn. This line of thinking especially makes sense in the wake of new reports of the omicron variant.

Meanwhile, it's easy to see why some people just wouldn't want to sell a home in the midst of a pandemic. During normal times, the idea of strangers romping through a property can be unsettling. At a time when everyone is being urged to practice social distancing, the idea can be downright disturbing.

Also, some people's plans may be in flux because of the pandemic. It's understandable that sellers may want to sit tight and wait for the greater economic and COVID-19 picture to stabilize.

All of this means that limited housing inventory could continue to plague the real estate market well into 2022. Buyers may not have a much easier time purchasing homes in the coming year compared to the current one.

Should you put your plans to buy a home on hold?

If you're in a comfortable, stable housing situation right now, then you may, at this point, want to consider delaying your home buying plans until later in 2022 or even 2023. Even if housing inventory starts to pick up in the coming year, home prices are very inflated right now, and it may take many months for them to return to more moderate levels.

At the same time, mortgage rates are likely to stay low well into 2022 and possibly even beyond. Waiting to buy could spare you the stress of having to navigate a housing market with record low inventory, not to mention save you money on the cost of a place to call your own.

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