Even in a housing market that has slowed significantly due to rising mortgage rates, the supply of homes for sale is about half of what it was in 2019.
The shortage is hitting some buyers more than others.
The popular 30-year fixed mortgage rate hovered in the high-6% range in May. At that level, buyers with an annual income of $100,000, slightly above the national median, could afford a house with a maximum price of about $341,000. But just 39% of the homes for sale were listed at or below that price point in May, according to a new report Thursday from Realtor.com with the National Association of Realtors.
In a balanced market of supply and demand, 64% of homes should be affordable to buyers who make $100,000 a year, given the size of that population. As a result, the market currently lacks about 285,000 of those listings.
Just five years ago, those same earners could afford two-thirds of homes for sale. Home prices and mortgage rates were significantly lower.
The lack of affordable homes heated up competition in the market this spring, which reversed the cooldown in home prices that started last summer.
“It’s almost a tale of two cities where we have houses under $500,000, they’re absolutely selling incredibly fast. Under $350,000 and $400,000, there’s multiple offers,” said Noah Herrera, a real estate agent in Las Vegas, during an open house in mid-May. “Over $500,000, it slows down a little bit.”
At the higher price ranges, too many homes are for sale for the number of Americans who can afford them. In fact, for every home listing above $680,000, the market is lacking twice as many homes under $341,000.
“Ongoing high housing costs and the scarcity of available homes continues to present budget challenges for many prospective buyers, and it’s likely keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve,” said Realtor.com’s chief economist Danielle Hale.
The pricey existing home market is pushing more buyers…
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