The supply of residential homes for sale is being outpaced by demand for the first time in years!
According to data supplied by the Greater Chattanooga Association of Realtors, there were 4,980 homes available for sale to begin July 2012, in comparison to 5,993 homes available at the same time last year. The last time we saw inventory levels this low in the biggest selling month of the year was July 2006.
This decrease in inventory is good news to home sellers, where less competition is a good thing. When buyers have more homes to choose from, the number of days on the market increases and so does the pressure on pricing, thus more negotiation takes place.
The reason for the decline in inventory is a simple math equation: the supply of new homes coming to market is being outpaced by the increase in home sales. For the last three months we have seen the number of new listings coming to market increase by 1.7 percent. This is in contrast to home sales increasing by double digits (+22 percent for May and a similar increase is projected from June). We are simply selling homes at a faster rate than they are coming to market!
We are far from being back in a “seller’s market” like we saw in 2006; however there are specific areas of our market where we could sell more houses if we had them. I am beginning to hear of multiple offers on homes that are in good condition and priced fairly for the market. This is underscored by the average amount of negotiation decreasing in comparison to recent years. In 2012 we are seeing the percent of last price received run