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As housing inventory ticks up, how does that impact home prices?

Justin Ho Sep 23, 2024
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Falling mortgage rates could encourage more homebuilders to construct new housing. Mario Tama/Getty Images

As housing inventory ticks up, how does that impact home prices?

Justin Ho Sep 23, 2024
Heard on:
Falling mortgage rates could encourage more homebuilders to construct new housing. Mario Tama/Getty Images
HTML EMBED:
COPY

We’re due for some fresh data on the housing market this week. The latest Case-Shiller National Home Price Index is out Tuesday, and the Census Bureau’s New Home Sales report comes out on Wednesday.

Other recent data have shown that housing inventory has finally started to tick up for both new and existing homes. But will that have an impact on home prices?

A big reason the supply of homes for sale is increasing is because mortgage rates are falling. That can push existing homeowners to put their homes up for sale and homebuilders to make new ones.

“Builders are feeling a little bit more hopeful about the outlook for demand,” said Odeta Kushi, deputy chief economist at First American.

Cheaper mortgages are likely going to push up housing demand, as well, she said.

“Just given the demographics that we know, there’s just a bunch of millennials on the sidelines waiting for the payment-to-paycheck calculation to make financial sense for them,” she added.

As a result, housing prices are going to depend on which grows faster: housing supply or housing demand.

Either way, prices will probably stay fairly steady, per Chen Zhao, economics research lead at Redfin.

“It might inch up a little bit, but I wouldn’t really expect it to really accelerate, and also would not expect price growth to fall a lot,” she said — even as mortgage rates continue to tick down.

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