Freddie Mac: Tight Housing Inventory Could Crimp 2017 Home Sales

Freddie Mac, McLean, Va., said tight housing inventory continues to hamper many home buyers and could ultimately put a damper on 2017 home sales.

The company’s monthly Outlook for April said with inventory tight, home prices outpacing incomes and interest rates headed higher, affordability has declined, putting a pinch on prospective homebuyers. The report noted for-sale housing inventory, especially of starter homes, is currently at its lowest level in more than 10 years.

Freddie Mac Chief Economist Sean Becketti said the is having a ripple effect, as many homeowners are not selling their homes for fear of not being able to find another home they like and that falls within their budget. Other borrowers do not want to let go of the extremely low mortgage rate they currently have.

“Tight housing inventory has been an important feature of the housing market at least since 2016, Becketti said. For-sale housing inventory, especially of starter homes, is currently at its lowest level in over ten years. If inventory continues to remain tight, home sales will likely decline from their 2016 levels. As we enter the spring home buying season, all eyes are on housing inventory and whether or not it will meet the high demand.”

The report noted home prices have still not recovered to their pre-crisis levels for many homeowners and selling their homes would fetch them less than the amounts they owe on their mortgage.