The “collapse” of housing inventory in June has led to the first significant increase in home prices this year, MarketNsight reported.
Total inventory turned negative year over year for the first time in 13 months in late June, and two weeks later, this drop in supply showed up in prices, which rose 6% year over year in July. Year to date, prices were up 1% compared to the same period of 2022. The real estate data and analysis firm noted that July’s prices were up 18% over July 2021, 43% over July 2020 and 55% over July 2019.
“It seems that many prognosticators have forgotten the basic principles of supply and demand,” MarketNsight Principal and Chief Analyst John Hunt said. “When supply is scarce, prices rise. Even with interest rates at 20-year highs constraining demand, we still do not have enough supply.”
Looking ahead, MarketNsight expects inventory to continue its year-over-year decline with prices continuing to grow for the rest of 2023, possibly nearing the 50-year appreciation average of 4% to 5%.
“There was already a housing shortage before the pandemic,” Hunt said. “The pandemic housing boom made it worse, and the Fed’s actions have only deepened the inventory crisis.”