While more homes are on the market now compared to this time last year, the number of buyers still exceeds the available houses. This means that if you’re considering selling, your home has a strong chance to stand out.
A few key factors explain why there’s a housing shortage, and understanding these can highlight why the market favors sellers ready to make a move.
What’s Driving the Housing Shortage?
- Home Underproduction: For years, new homes haven’t been built fast enough to meet demand. According to Zillow:“In 2022, 1.4 million homes were constructed — a record for recent years. However, the number of U.S. households grew by 1.8 million that year, meaning construction didn’t keep up, further adding to a longstanding deficit affecting affordability.”
- Increased Costs: The pandemic has increased building expenses due to higher material prices, labor shortages, and supply chain issues, slowing or halting new construction in some regions.
- Regional Disparities: The shortage is more intense in certain areas, especially popular regions where housing demand outpaces new construction. In these areas, building permits can’t keep up with job growth, tightening the market and driving up prices.
How Significant Is the Shortage? Based on recent estimates from Real Estate News, the U.S. faces a housing gap of about 3.3 million homes, as reflected by expert analyses (see graph below).
This shows there’s a significant number of homes that need to be built just to meet current demand from buyers. But what about future demand?
According to John Burns Research and Consulting (JBREC), over the next 10 years, the U.S. will need about 18 million new homes to meet projected demand, including homes for new households, second homes, and replacements for aging or unusable homes.
So, even though more homes are on the market compared to last year, there still aren’t enough of them to go around. This is where you can really win if you’re ready to sell your house.
What You Need To Remember
If you’re thinking about selling, the shortage of homes for sale means your house is likely to get some serious attention from buyers. It’ll take years to climb out of this inventory deficit, and the market is still very tight. So, when buyers are competing for relatively few homes like they are right now, that creates more interest in the houses that are on the market, putting upward pressure on prices and ultimately working in your favor.
And since every market is different, it’s important to work with a real estate agent who understands local trends. They can help you price your house right and create a strategy to attract the right buyers.