After dipping in the second quarter of 2021, the supply of most affordable and affordable homes is back on the rise. And the uptick in home inventory corresponds with the end of mortgage forbearance, which could force thousands of Americans to sell their homes, according to a study by Redfin released Wednesday.
The report divided all U.S. residential properties into five categories (most affordable, affordable, mid-priced, high-end and luxury). The three middle tiers were of equal size and the top and bottom tiers represented the top and bottom 5% of the market. Inventory, sales records and sales price data was then compiled for each category.
The supply of all types of homes plummeted after the WHO declared COVID-19 a pandemic in early March 2020. While low home inventory had already been an issue in many markets, this exacerbated the problem.
However, in the third quarter of 2021, the supply of America’s most affordable homes rose a record 13% year-over-year and the supply of affordable homes rose 1.6% from a year ago. In the third-quarter, Redfin recorded 78,000 active listings in the most affordable tier, but this is still well below the 100,000+ active listings recorded during Q3 of 2013-2016.
“The end of forbearance has forced many lower-income Americans to put their homes up for sale and become renters,” Redfin chief economist Daryl Fairweather said in a statement. “This has caused the number of affordable homes on the market to surge, helping replenish inventory amid an acute housing shortage. It’s a rainstorm after a long drought, but the drought isn’t over yet.”
On the other end of the spectrum, the supply of luxury homes fell 21.2% from a year prior. During the third-quarter Redfin reported 158,000 active luxury listings, the fourth lowest total recorded since Redfin began recording this data in 2013. The supply of high-end and mid-price homes fell 17.9% and 10.1% year-over-year, respectively.
In addition, the purchase of luxury homes fell 7% year-over-year in the third quarter and the purchases of high-end homes fell 3.4%, marking the first declines since the three months ending July 31, 2020.
“The luxury market remains strong, but is past its pandemic peak,” Fairweather said in a statement. “Now that life is somewhat back to normal and travel restrictions have been lifted, many affluent Americans are opting to spend their money on things other than housing.”
As would be expected, the lack of luxury and high-end homes on the market reduced sales, however demand across all tiers remains strong as homes continue to sell faster and for more money than a year ago.
Across all price tiers, the median sale price climbed at least 15% year-over-year in the third quarter and a recent Redfin report found that on-third of all homes that sold during the four weeks ending October 24, 2021, went under contract within seven days of hitting the market.
