How Does the Supply of Homes for Sale Impact Buyer Demand?

by | Oct 1, 2018 | 0 comments

The price of any item is determined by the supply of that item, as well as the market’s demand for it. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.

Their latest edition sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand).

Buyer Demand

The map below was created after asking the question: “How would you rate buyer traffic in your area?”

How Does the Supply of Homes for Sale Impact Buyer Demand? | Simplifying The Market

The darker the blue, the stronger the demand for homes is in that area. The survey showed that in 38 out of 50 states buyer demand was slightly lower than this time last year but remains strong. Only six states had a ‘stable’ demand level.

Seller Supply 

The index also asked: “How would you rate seller traffic in your area?”

As you can see from the map below, 23 states reported ‘weak’ seller traffic, 22 states and Washington D.C. reported ‘stable’ seller traffic, and 5 states reported ‘strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for homes.

How Does the Supply of Homes for Sale Impact Buyer Demand? | Simplifying The Market

Upstate South Carolina

As indicated in the map below buyer demand is still strong in the upstate. Although we’ve seen a slight uptick in inventory,16.2% increase from last year at this time, there’s still not enough inventory to keep up with demand. Pending sales were down 55% from this time last year which is indicating buyer frustration in the market. Buyers shouldn’t wait to purchase because interest rates are at 5% and are predicated to be above 5% by this time next year. If inventory continues to remain below normal market levels (6-months) then home prices will continue to rise. Seller’s should act now if they’re looking to downsize or upgrade.

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together so I can help you capitalize on the demand in the market now!




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