Tightening Inventory during the Spring House Buying Season

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The mortgage rates have reached a six-month low in the middle of May 2014 while many lenders have relaxed their credit standards due to the low demand for home loans over the past months. Despite these positive trends, many prospect buyers do not enter the housing market. One of the major reasons for this is the falling inventory.

In April 2014, the housing inventory in the United States fell by 0.4% on an annual basis. There was a decrease on a monthly basis as well, but it was significantly smaller. Ever since the beginning of 2014, the inventory has been falling down after a slight increase in the fourth quarter of 2013.

21 out of the 35 largest metro areas in the country have lower inventory compared to the same time last year. Houston has the largest decrease in the number of homes for sale from April 2013 to April 2014 – 26.6%. It is followed by San Antonio with 23.7% and Boston with 23.4%.

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In many of the metro areas the inventory drop is the largest in the segment with the most affordable housing. This is a major obstacle for first-time home buyers trying to enter the market. In fact, many experts share the opinion that this is the primary factor preventing prospect homeowners from making a move during the traditionally favorable spring house buying season.

The even tighter inventory in the lower end of the market is explained with the still high average negative equity rate. Many existing homeowners in this segment are underwater and this prevents them from offering their houses for sale. This trend will most likely remain as a major increase in the market value of properties is not expected. In fact, in April the home values feel by 0.1% on a monthly basis. The increase on an annual basis is expected to be slightly above 2%.

The inventory will most likely remain tight in the coming months.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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