For Americans looking to buy a house, there is not a lot of inventory out there.
“For-sale housing inventory, especially for starter homes, is currently at its lowest level in over 10 years,” Sean Becketti, chief economist for the Federal Home Loan Mortgage Corporation, Freddie Mac, said. “As we enter the spring home buying season, all eyes are on housing inventory and whether or not it will meet the high demand.”
In its monthly Outlook released April 18, Freddie Mac projects that the tight inventory will cause home sales to decrease to 5.9 million this year. It is a disappointing follow up to sales and construction as measured by housing stats in 2016, which Freddie Mac called housing’s best year in a decade.
There are a couple of contributing factors, the public government-sponsored company reports.
First, “many homeowners are not selling their homes for fear of not being able to find another home they like that falls within their budget,” Freddie Mac said.
Another reason for the low inventory is that “some borrowers do not want to let go of the extremely low mortgage rate they currently have.”
Additionally, home prices overall wouldn’t garner owners enough money to pay off their existing mortgages, Freddie Mac reports, a situation that would leave them under water, so to speak.
In 2016, housing starts were 1.17 million and Freddie Mac now projects they will be 1.26 million for 2017, “well below the historical average of 1.36 million and the approximately 1.7 million additional housing units the U.S. economy needs to add to replace existing stock and meet new household formation and second-home demand.”
The full April Outlook is now available online.