November 12, 2021

Listings could surge as calendar turns the page

As the country works through the changes precipitated by the coronavirus pandemic, experts say a significant housing market shift looks to be underway.

Preliminary data shows the supply of affordable homes for sale jumped 13% in the third quarter as mortgage forbearance programs came to an end. Affordable housing remained below historic levels despite the increase. There were 78,000 such listings during the third quarter, compared with more than 100,000 during Q3 2013 through 2016.

Researchers believe total U.S. inventory could rise as much as 11% by the end of 2021. Housing inventory plummeted 50% between April 2020 and April 2021, as median home prices soared 17.2%.

Yes, homebuilders are beefing up new home inventories as best they can, but much of this presumed additional volume would be culled from existing stock - via the impending end of federal forbearance.

During the height of the health crisis, the federal government passed emergency rules allowing some 7.2 million homeowners to pause mortgage payments due to financial hardship.

Most have resumed payments since, but on Sept. 30, the government began phasing out the final 1.7 million participants. Many will receive further loan adjustments from their banks, and others may take advantage of others forms of federal relief

A significant number will face foreclosure, though bank action is unlikely to sink their financial futures this time around.

Unlike the economic wasteland after the Great Recession, today’s strong housing market means nearly all homeowners have earned positive home equity. They can sell, and then walk away without mortgage debt.

While it won’t fully solve the country’s overall shortage, a significant percentage of these 1.7 million homes on the market could prove a positive “shock." And of course, any foreclosures that do go through would eventually be added to the listing rolls, as well.

While a couple hundred thousand new listings in a nation with 80 million homes might not seem like many at first blush, consider there are just over 600,000 homes for sale right now. Sales of newly constructed homes unexpectedly surged 14% in September, while existing homes rose 7%, impressive considering the ongoing lack of supply.

Despite rising sales, just 59% of home offers faced competition in September, amid a seasonal housing-market slowdown and an uptick in mortgage rates. September marked the fifth-straight month of bidding war declines, putting it on par with the rate from September 2020 (58.3%).