Economists from California-based data provider CoreLogic provided new evidence in its June MarketPulse report that severe price declines are keeping home sellers out of the market, the Wall Street Journal reported.
Hard-hit markets such as Miami, Phoenix and Orlando have experienced particularly sharp drops in amount of housing inventory.
The months’ supply of unsold homes fell to 6.5 months in April, down from nine months last June. It’s currently at the lowest level in the past five years.
It was found that the supply of homes for sale declines as the rate of negative equity — the share of borrowers who owe more than what their homes are worth — rises. This means negative equity is now restricting the supply of homes for sale.
Markets where more than half of borrowers are underwater had inventory to last 4.7 months at the rate of April’s sales, below the national average of 6.5 months. Markets where only 10 percent of borrowers are underwater had a higher-than-average 8.3 months supply.
Another reason for the drop in amount of homes available is the influx of investors picking up foreclosures to rent out in hard-hit markets, taking inventory off the market for now.
Homeowners with positive equity can also be unwilling at today’s lower prices, also contributing to the decline.
For the full report, visit: http://www.corelogic.com/downloadable-docs/MarketPulse_2012-June.pdf
