This reversal is characterized by a decrease in the permits granted for new housing construction, while the inventory of homes available for sale has increased. In this article, we will discuss what this reversal could mean for the housing market and the implications for homeowners and potential homebuyers alike.
In early 2021, housing permits had been trending upwards as a result of the increase in demand due to the strong economy and low interests rates. The demand for housing was so strong that housing begins were outpacing existing inventory, creating a shortage in the supply of homes on the market. This shortage led to a decrease in the time homes were on the market as well as an increase in prices.
However, the recent decrease in housing permits indicates that the demand for new housing may be abating and the market may be readjusting. The uptick in sale inventory, which includes existing homes, is thought to be indicative of a shift in consumers’ preference away from newly constructed homes and toward existing ones. This could result in a softening of the housing market.
The potential implications of this reversal from early 2021 trends for homeowners and potential homebuyers depend on the direction the housing market takes from here. If housing prices remain high, as is currently the case, homeowners may benefit from selling their homes while prices remain high. However, potential homebuyers may be discouraged from entering the market if prices remain high.
If housing prices go down, potential homebuyers may find it easier to enter the market. Homeowners may be less inclined to sell as they may be afraid of taking a loss on their home investment.
In conclusion, the recent reversal of trends in the housing market may signal a shift in consumer preference away from newly constructed homes and toward existing ones. If housing prices remain high, homeowners may benefit from selling their homes while prices remain high, but potential homebuyers may be discouraged from entering the market. On the other hand, if housing prices begin to trend downward, potential homebuyers may find it easier to enter the market, while homeowners may be less inclined to sell as they may be afraid of taking a loss on their home investment. Ultimately, it will be important to monitor the housing market closely in order to determine the effects of this reversal of trends.
This article was contributed on Oct 31, 2023
