housing is below 5, that is considered a tight market where prices will rise. It would take 5 months for all the houses to sell. So, if there are 5 houses for sale and you sell 1 house per month, the months supply would be 5. The best measurement of supply and demand balance for real estate is called the "months' supply." The months' supply takes the total inventory or how many houses are for sale, divided by the current pace of sales. So, demand is falling, but there’s even less supply. There are many people who say even though the volume of transactions is declining, home prices still won’t fall because there is no supply. So, demand is dropping, and this is because mortgage rates have increased rapidly, making homes completely unaffordable at these very elevated prices. ![]() So, the volume of transactions is down from 7 million to 4.8 million, a decline in volume of 2.2 million units or 31%. At the end of 2020, the pace of single-family home sales was over 7 million. The total volume of home sales has been declining over the past year. ![]() As the name suggests, existing home sales are homes that have a current owner, and new home sales are homes without an existing owner, a newly constructed unit. Of the 4.8 million total home sales, 87% are existing home sales, and about 13% are new home sales. At the end of 2022, total single-family home sales are trending towards an annual pace of 4.8 million. Single Family Home market is a very important part of the U.S. housing market and what it means for home prices over the next 6-12 months. In this article, I’m going to explain the true inventory situation in the U.S. But now, with many indications that home prices are already falling, the housing shortage narrative is feeling a bit shaky. ![]() Many people actually said that home prices would not fall because the inventory situation was so tight. Everywhere you look, you see headlines about the lack of inventory driving up home prices. The Housing Shortage has been one of the most popular stories in real estate and the economy over the last year.
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