Two Mismatched Markets: Inventory

inventory-mismatchThe inventory of existing homes for sale in today’s market is at a 3.6-month supply according to the National Association of Realtors (NAR). Inventory is now 7.1% lower than this time last year.

Historically, inventory needs to be at a 6-month supply for a “normal” market where home prices appreciate with inflation. Anything less than a 6-month supply is considered a sellers’ market, in which the demand for houses to buy outpaces supply of homes for sale.

The United States has been in a sellers’ market since August 2012, but last month’s numbers reached a new low.


Trulia reported not only is there a shortage of homes for sale, but the homes that are available are not meeting the needs of what buyers are looking for.

Homes are generally categorized into 3 groups by price range: starter, trade-up, and premium.

Trulia’s market mismatch score measures the search interest of buyers against the category of homes that are available on the market. For example: “if 60% of buyers are searching for starter homes but only 40% of listings are starter homes, [the] market mismatch score for starter homes would be 20.”

The results of their latest analysis are detailed in the chart below.


Nationally, buyers are searching for starter and trade-up homes and are coming up short with available listings.  This leads to a highly competitive seller’s market in these categories. 92% of the top 100 metros have a shortage in trade-up inventory.

Premium homebuyers have the best chance of less competition and a surplus of listings in their price range with an 11-point surplus, leading to more of a buyer’s market.

“It leaves Americans who are in the market for a home increasingly chasing too fewer options in lower price ranges, and sellers of premium homes more likely to be left waiting longer for a buyer.”

Real Estate Bottom Line

Real estate is local. If you are thinking about buying OR selling this spring, let’s get together to discuss the exact market conditions in our area.

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