A row of houses

Little chance of an inventory explosion this year 

ATTOM’s midyear review looks at where housing supply is headed along with what to expect with home prices and foreclosures.

July 1, 2024
2 minutes

Housing supply has been showing some signs of recovery, but don't expect to see an inventory explosion anytime soon.

That's one of the takeaways from ATTOM's midyear review of the housing market. The June 28 webinar featured analysis from Mike Simonsen, founder of Altos Research, and Daren Blomquist, vice president at Auction.com.

With locked-in low mortgage rates still influencing the market and unemployment rates relatively low, Simonsen said there's nothing to suggest a big flood of sellers is coming.

"What it also tells us is until we have more sellers, home sales will remain restricted," Simonsen said.

For the short term, Simonsen expects inventory to continue rising until the late fall, when seasonal pressures kick in and homes are taken off the market for the holiday season.

One component that could disrupt the housing inventory cycle is mortgage rates — if rates fall significantly, inventory will also drop as more buyers enter the market. If rates rise, inventory will also climb as buyers stay on the sidelines.

What else can the industry and consumers expect to see in the second half of the year?

Sale prices: Home prices are expected to plateau later this summer and then follow seasonal declines, but Simonsen said it will be more "compressed" growth compared to previous years, particularly if interest rates remain elevated. The data doesn't show downward pressure leading to significant nationwide home price drops yet.

Price reductions: The share of homes with price cuts is expected to peak before the holiday season, possibly hitting around 40%. The current share, which Altos puts at 36.4%, is elevated compared to previous years, Simonsen said.

Distressed properties: Foreclosures and delinquencies remain well below pre-pandemic levels, but there has been a slight uptick. In a survey of clients, Blomquist said rising insurance and property taxes are becoming top risk factors for a rise in distressed property. Consumer debt and rising unemployment were also top concerns.

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