Why are housing inventories growing at the higher end of the market in some places?
Why are housing inventories growing at the higher end of the market in some places?
Sales of new homes fell 4.5% in January. It’s been hard for prospective homebuyers to find an available home lately — last month, inventory of existing homes for sale hit a record low, according to the National Association of Realtors.
But in some parts of the U.S., inventories have been growing at the higher-end of the housing market.
We’re talking about homes in the $500,000 to $1 million price range. Supply of those homes is up in part because that’s the price sellers are asking for.
“If you’re a seller, it’s a seller’s market,” said Gay Cororaton, senior economist with the National Association of Realtors. She said supply of those homes is growing, especially in the South.
Mark Vitner, senior economist with Wells Fargo, said a lot of people have been selling homes in the Northeast and moving south, where that money can go further.
“And so a larger proportion of the homes that are being built in the South tend to be well above the median. They tend to be at $500,000 or above,” he said.
It’s also getting more expensive to build houses. Lumber prices are soaring and other building materials are in short supply.
Because of that, “Builders are trying to build more homes where they have a little bit more room for error,” Vitner said.
When homes sell for more, builders can still make a profit if construction costs suddenly rise.
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