Relatively few houses to buy

The supply of homes for sale is low:

The national supply of homes for sale hasn’t been this thin in nearly 20 years. And over the past year, the steepest drop in supply has occurred among homes that are typically most affordable for first-time buyers and in markets where prices have risen sharply.

In markets like San Diego, Boston and Seattle, competition for a dwindling supply has escalated along with pressure to offer more money and accept less favorable terms…

About 1.75 million homes were for sale nationally at the end of February, according to the National Association of Realtors. That’s down 6.4 percent from a year earlier and only slightly up from January, when listings reached their lowest point since the association began tracking them in 1999. All told, the supply of homes for sale has fallen on an annual basis for the past 21 months….

Despite the scant supply, U.S. home sales are expected to rise this year, economists say. Fueled by job growth, pay raises and still-low loan rates — and perhaps fearful of being left out as more homes are snapped up and prices rise further — many people are looking to buy.

There are certainly downsides to a low supply of homes, particularly for those with fewer resources. At the same time, the opposite end of the market – a lot of homes on the market – negatively influences sellers. This leads me to a question: (1) how often do we reach an equilibrium in the housing market and (2) how long can such a relatively good balance last once it does occur? In all three cases there is something report on as the pendulum swings between buyers and sellers.

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