Only 1.65 million homes were on the market at the end of December. That translates to three and a half months of supply, well shy of the six-month supply a healthy market has.
CNBC reports that for-sale listings dipped to their lowest point since 1999. The low inventory levels stem from intense demand and a weak, but improving, pace of new single-family home construction. As a result, one-fifth of all communities have a supply of less than three months. For example, inventory in Dallas has decreased 41 percent since December 2015.
First-time buyers are struggling the most. Buyers who fare the best under current conditions are ones who are pre-approved for a mortgage and could make a large cash down payment. Many young adults don’t quite fit that bill.
"I continuously say that the industry and the first-time buyer need more homes priced below $250,000, but the high costs of lots, labor and regulations puts tight margins on this price point. In coming months we'll watch to see what influence the rise in rates had," said Peter Boockvar, chief market analyst at The Lindsey Group.