National housing inventory fell 2.5% annually in September, a sharper decline than August’s 1.8% decrease, according to realtor.com
Supply hit a record low about two years ago, but a lull in home sales over the past year helped build back much-needed supply, especially in the mid-priced range. But then a sharp drop in mortgage interest rates this summer brought demand back and depleted that supply dramatically.
Additionally inventory has always been leanest on the low end, as investors have been very active in that price range since the foreclosure crisis. Roughly 5 million mostly entry-level homes have been turned into single-family rentals, and strong demand for those rentals means investors are unlikely to put the homes up for sale anytime soon.
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