Inventory shortage is latest blow to U.S. housing market

TRD New York /
Oct.October 18, 2011 10:18 AM

Considering the sluggish sales activity, rock bottom pricing and glut of foreclosures, the national housing market is suffering from a new, surprising problem. According to the Wall Street Journal there is actually a lack of inventory, as the number of home sales has declined 20 percent in the last 12 months to 2.19 million homes, according to Realtor.com.

Though declining inventory is usually seen as a sign of a healthy market, the current shortage has arisen for two reasons: banks have been slow to process foreclosed properties that would otherwise be on the market and sellers reluctant to accept discounted prices are pulling their homes off the market.

“The inventory is low, so it’s hard for buyers to find their dream home,” Joan Downing, a real-estate agent in Bloomfield Hills, Mich., told the Journal. “That’s been our challenge more than anything: finding the inventory for the clients. Nobody’s complaining about the pricing or the interest rates.”

The lack of offers and nearby deals further cools the market, as buyers and sellers have more difficulty pricing their offers. Suddenly, the shadow inventory set to hit the market in the coming months appears to actually be a remedy for the market, although it will likely sink prices even further. [WSJ]


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