By Brian O'Connell
Talk to any Realtor these days and you'll likely get an earful about "limited inventories." That's a big departure from the past few years, when home sellers were eager, for a variety of reasons, to pound those "for sale" signs into their front lawns. While existing home sales eased in December, the number is 12.8 percent higher than in December 2011, according to the Washington-based National Association of Realtors.
All together, total U.S. home sales last year rose to 4.65 million, up from 4.26 million in 2011, the NAR says. That's the highest total since 2007. The story now in the U.S. housing market is all about demand.
"Record-low mortgage interest rates clearly are helping many homebuyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales," says Lawrence Yun, chief economist at the NAR. "The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013."
But there's another issue that could affect the housing market in a big way this year. In essence, the script has flipped from 2007 to 2012, as homeowners are more inclined to sit on the sidelines and not sell their homes -- at least not right now. Over the past few years, there have largely been more sellers than buyers, forcing home sellers to reduce prices and keeping homes from getting offers from multiple bidders.
According to a survey by Redfin, a Seattle-based online real estate broker, only 49 percent of 895 homeowners "with intent to sell their homes" plan on selling their homes in 2013, and only 22 percent believe now is a good time to sell. Mainly, that sentiment is tied tightly to a perception that home prices are rising: 81 percent of homeowners surveyed believe prices will rise in 2013, and 34 percent say that "missing out" on future home price gains is the primary reason they are holding off on selling their homes.
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That has led to a downward shift in U.S. homes for sale, Redfin says. The firm says that home sale inventories "plummeted in every market" it covers. The company's data show 30 percent fewer home sale listings than in 2012. "The growing number of home sellers whose top concern is that they may miss out on even greater price gains suggests homeowners' continued reluctance to enter the market just yet," Redfin says in a Jan. 24 statement.
That may be only a temporary trend, though. "As prices continue to rise, Redfin expects what it now considers an inventory crisis to ease as the spring and summer home-selling seasons approach," the firm reports. The takeaway for homebuyers? It's a bit of a balancing act. Sure, interest rates are low, but some analysts expect mortgage rates to rise in 2013. With limited home inventories on the market and prices expected to rise, maybe it's a good idea to get cracking, even in the dead of winter, and see what deals are out there right now.