The 2021 spring market is starting off at the lowest level of inventory of homes on the market in nearly 40 years, with job growth ramping up amid an aggressive fiscal policy and continued low mortgage rates. Homebuyers are likely to face the most competitive spring market in years. Here are the latest indicators on inventory, pending sales, home prices, job growth, and mortgage rates that are pointing to a hot spring market in a broad swath of metro areas.
Shortage of 2.4 million homes for sale to meet 6 months of supply
The inventory of existing and new single-family homes for sale is the lowest since 1982.1 As of the end of February 2021, the inventory of homes for sale stood at a historic low of 1.07 million (1.03 million of existing homes, 42,000 new single-family homes), which is equivalent to just 1.8 months of the average monthly sales of 582,917 (518,333 of existing homes, 64,583 of new single-family homes), a near historic low (1.7 months in December 2020 and January 2021 were the historic lows).Historically, six months of the average monthly demand has kept home prices from overheating. At six months of inventory, there should be 3.49 million homes on the market, but as of February, only 1.07 million homes are on the market, resulting in a gap of 2.4 million homes for sale.