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October 23, 2014

Low Inventory Levels Lift Home Prices, Limit Sales

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Low Inventory Levels Lift Home Prices, Limit Sales

Inventories of for-sale homes have dropped significantly this year, helping to stabilize housing prices but also limiting the number of homes sold, The Wall Street Journal reports. 

The large inventory drops have been attributed to home owners waiting out the market for price increases, investors snagging up houses, fewer bank foreclosures, and builders curbing production.

But the low inventories are helping home prices to rebound. “Large drops in inventories have whittled away the discount at which foreclosures sell in many markets, which has further contributed to big price gains,” The Wall Street Journal reports. 

In places where prices are increasing, more home owners are deciding to sell, which is helping to lift some inventory levels. For example, prices are up 17 percent in Phoenix compared to a year ago. Inventories of homes for sale there have increased 10 percent from July. Still, inventories are 20 percent below year-ago levels. 

Source: “2013: The Year Home Inventory Hits a Bottom,” The Wall Street Journal (Dec. 19, 2012)

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