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Despite near record-low housing inventory, homebuyer demand, as measured by home tours and purchase offers, showed significant strength in April, setting the stage for increased sales activity in May and June. This persistent demand in the face of limited supply underscores a highly competitive market where determined buyers are actively making offers.
Why is buyer demand increasing despite low inventory?
The data indicates that the number of customers making offers grew at a rate more than five percentage points higher than the comparable period in the previous year. This suggests that buyers who are actively in the market are highly motivated. While the growth in home tours was only slightly above the previous year's level, the stronger growth in offers points to a sense of urgency among buyers. They are likely making decisions more quickly upon finding a suitable property due to the scarcity of available homes. This dynamic creates a seller's market, where multiple offer situations are common.
What does this mean for the spring housing market?
The consistent growth in purchase offers is a leading indicator for future closed sales. When an offer is accepted, the transaction enters the pending sales phase, which typically precedes a final closing by 30-60 days. Therefore, the robust offer activity in April directly points to stronger sales figures for May and June. This trend aligns with typical seasonal patterns but is amplified by the current supply and demand imbalance. The market is characterized by a low months of supply metric, which calculates how long it would take to sell all current listings at the present sales pace.
How should buyers and sellers approach this market?
For buyers, preparation is critical. This includes obtaining a mortgage pre-approval, a letter from a lender stating the loan amount you qualify for, which strengthens your offer. Being ready to act quickly and make competitive offers is essential. For sellers, the high demand environment presents an opportunity, but pricing a home correctly based on a comparative market analysis (CMA) remains vital to attract serious buyers. While the market favors sellers, overpricing can still lead to a property sitting on the market.
The key takeaway is that buyer determination is currently outweighing inventory constraints. While the number of homes for sale remains a challenge, the data shows a clear upward trend in purchasing intent. Both buyers and sellers should base their strategies on these concrete market signals, with buyers focusing on financial readiness and sellers focusing on accurate pricing to capitalize on the high demand.
