It’s still a very tight market, but it could be a foreshadowing of how quickly the mood can shift the balance.
“Consider that demand has been fueled by expectations of rising prices and a last attempt to lock in cycle-low mortgage rates, while supply is held back by expectations of the same price,” Cavik said, noting that How can sellers postpone listing hoping to order a higher price later?
Sentiment can change quickly, he argued, adding that the market could soon regain equilibrium if it detects a lower price. It will still take some time, with permanent inventory on sale for only 1.6 months at the current rate, which is a new low.
Against that background, prices continued to rise in February, with the MLS HPI up 3.5%, the strongest monthly gain on record. It follows through with the pace seen a year ago and the fastest clip from the period in early 2017. This leaves the national price increase at 29.2% y/y; 39.5% annually in the last six months; and 44% annually over the past three months.
While he acknowledged that some supply-side issues deserve sympathy over the long term, Kavic suggested that recent movements in housing markets could be chalked more to current short-term factors.