After a year of frenzied activity that intensified the preexisting housing supply shortage, listings are soon likely to be on the rise, analysts surveyed by Zillow said.
An increased number of homes are expected to hit the market in the next 12 months, according to the company’s third quarter Home Price Expectations Survey. Industry experts believe the largest share of the new supply — an estimated 39.7% — will come from existing borrowers who are looking to move.
As competition for listings declines and consumer optimism rises, more homeowners will become confident that they’ll find a new place to live and will finally put their homes up for sale, Zillow Economic Data Analyst Nicole Bachaud said in the report.
"This is welcome news for many potential buyers, who should see more options to help their home search,” Bachaud said. “Along with the expected moderation of price appreciation in coming months, the market is beginning to shift toward a balance between buyers and sellers — although that middle ground is still a far ways off."
Behind the expected wave of sellers entering the fray, 22.5% of inventory is expected to come from new construction, 12.2% from landlords and investors turning rentals into for-sale units, and 9.6% from homeowners selling and becoming renters.
With lumber prices gradually falling from May’s record highs, the amount of August housing starts was higher than expected and homebuilder sentiment rose for the first time in five months in September. However, labor and material shortages are likely to dampen the pace of new construction, according to First American Deputy Chief Economist Odeta Kushi.
“The bottom line is the housing market has been underbuilt for a decade and builders can't close the gap between supply and demand overnight, but they are trying,” Kushi said in a statement to NMN.
Meanwhile, only 5.4% of respondents to the Zillow survey said foreclosures would feed the available housing supply. As of Sept. 12, about 1.5 million borrowers remain in forbearance, based on the latest Mortgage Bankers Association data. Zillow forecasts that an estimated 850,000 of those forborne borrowers to exit their plans by November with around a quarter of them going up for sale.
