Spring is traditionally a favorable time of year for homebuyers. However, with a limited number of homes available for purchase, sales nationwide are slowing. According to the National Association of Realtors, housing inventories are near decade lows and are continuing to pressure home prices.
Recent data shows there is more demand than supply in the current market, which means conditions broadly favor sellers. Meanwhile, buyers are out there looking to purchase homes - buyer traffic is 25 percent above a year ago and sellers are reportedly receiving multiple bids. The good news for buyers is home construction is increasing and low mortgage rates are keeping housing affordable. However, underwriting standards remain excessively tight.
NAR data shows that total housing inventory at the end of March was 1.93 million existing homes available for sale, which represents a 4.7-month supply at the current sales pace. NAR Chief Economist Lawrence Yun stressed the need for a housing supply of more than six months to have a generally balanced market between buyers and sellers.
The current supply of homes for sale is 17 percent below year-ago levels, according to NAR data, and homes are also selling much faster. The typical home sold in March was on the market for one month less than it took to sell a year ago. The median time on market for all homes was 62 days in March, down from 74 days in February.
Here in the Greater Chattanooga market, we are following the national trends and are also experiencing a seller's market. For the week ending April 26, our local market statistics show new listings increasing by 3.6 percent, to 258. Pending sales decreased 48.8 percent, to 85; and inventory decreased 9.3 percent, to 4,733.
Despite these conditions, homeownership remains desirable to many renters. Just because the current market tends to favor sellers doesn't mean buyers can't still find their dream home.
The Greater Chattanooga Association of Realtors has identified several tips for buyers in today's market. First, before you start looking at potential homes, know your budget. Lenders will evaluate your income, savings and credit history to qualify and approve you for a mortgage.
We also recommend identifying neighborhoods of interest. Also, think about what you need and want in a home, whether it's a certain number of bedrooms, a small yard or a garage. Once you have a good idea about what you're looking for it's easier to know it when you see it.
When homes are selling quickly it's important for buyers to visit the home as close to when it goes on the market as possible. Open houses are a great way to see a lot of houses in a short amount of time. Buyers can get a good sense of what's available in the area and what their budget can afford.
Most importantly, we recommend working with a Realtor. Whether you are buying or selling a home, using a trained professional is a smart move. Realtors understand their local markets and can negotiate on your behalf. Buying and selling a home is one of life's biggest decisions and a Realtor can guide you through the process.