You may have heard that there are more homes for sale than ever before. You might also wonder if this is the start of another housing market crash.
The data, on the other hand, shows that’s not true. More inventory isn’t always a bad thing. In fact, it means the market is getting back to a healthier, more stable state.
What’s Going on With Inventory?
As of today, Realtor.com data shows that inventory has reached its highest level since 2020. This is shown by the white line in the graph below.
But what you need to know is that inventory levels still haven’t returned to what they were before the pandemic (shown in gray):
There are now more homes for sale than there have been for a long time.
Even though there are a lot more homes on the market than there were a few years ago, the number of homes on the market is still well below normal. And that’s an important background.
Why This Isn’t the Problem A Lot of People Think It Is
Some people think of 2008 when they hear that inventory is going up. Since stocks rose right before the market crashed back then. Things are very different now, though.
This is the main reason why. We don’t have too many homes; we need to get out of our deficit. We have a big problem with a lack of housing that will last for a long time.
From 2012 to the present, the red bars in the following graph show all the years when new home construction did not keep up with the number of new households. The housing deficit grew as the bars in the graph got smaller (see graph below):
One reason the housing shortage kept getting worse is that not enough new homes were being built to meet the needs of people who want to buy homes. Right now, the U.S. is missing millions of homes, and it will take years to make up that difference. What Realtor.com says:
“It would take 7.5 years to close the housing gap at the rate of construction seen in 2024 compared to new households and pent-up demand.”
That means there isn’t a chance of having too many homes on the market right now in most places. In fact, most markets need more homes, not fewer.
That’s why, even though inventory is going up, it’s not a national issue. It’s just filling in a hole that has been getting bigger for years.
Bottom Line
Do not be scared by the news. Having more stock doesn’t mean there will be a crash. There will be more normal and stable homes on the market soon.