Will Housing Inventory Stay Low for the Rest of 2021?

A man and woman wearing medical masks while touring an empty home with their realtor.

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Housing inventory has been sluggish all year. Will that trend continue?

There's a reason so many buyers have struggled to purchase a home this year despite the fact that mortgage rates have been overwhelmingly attractive. Housing inventory has been lacking in a serious way, and that's made it more difficult for people to find suitable properties to buy. It's also caused demand to soar, which, in turn, has caused a major spike in home prices.

As of last month, the U.S. housing market was short over 5 million homes for there to be enough inventory to meet buyer demand. And at this point, many potential buyers are wondering when inventory will pick up.

In the absence of a crystal ball, it's impossible to predict that. But based on what we know today, it's fair to say that inventory won't rise all that much between now and the end of the year. Here's why.

1. There's still a pandemic

A big reason so many sellers have held off on listing their homes has stemmed from the pandemic. At first, it may have been a matter of people not wanting to invite strangers into their homes during a health crisis. At this point, it may be more a matter of general discomfort and wanting to wait for life to get back to normal before making a move.

Either way, until things improve on the COVID-19 front, there's a good chance housing inventory will continue to lag. And based on the number of daily COVID-19 cases still being reported, it's unlikely that the outbreak will magically end in the next few weeks, especially as the weather gets colder.

2. The economy hasn't fully recovered

The U.S. economy is in a much stronger position now than it was a year ago. The jobless rate is down and many families are far more financially secure thanks to stimulus checks and the expanded Child Tax Credit.

But while the economy may be in better shape than it was earlier on in the pandemic, it's far from fully recovered. And there's still a lot of uncertainty as the COVID-19 outbreak rages on. Some sellers are apt to hold off on listing their homes until the economy improves even more -- and gets closer to its pre-pandemic state.

During normal times, the most popular months to list a home are in spring and summer. At that point of the year, it's easier to show off a home's curb appeal, take advantage of natural light, and host open houses without fears of snowstorms or downpours forcing cancellations.

Soon, the weather will turn cold again in parts of the country that aren't mild year-round. So it's unlikely that listings will pick up in those areas between now and the end of the year.

It could pay to wait to buy

Housing inventory has picked up a little in the course of 2021. But will it increase over the next few months to the point where it will drive home prices down? Probably not.

There's a good chance real estate inventory will stay low well into 2022, so buyers may want to resign themselves to waiting, if they're able. Right now, buyers are looking at paying sky-high prices for a place of their own, and they're having to take out larger mortgages as a result. So waiting until 2022 to purchase a home could end up making a lot of financial sense.

Our Research Expert