Housing Market Health Depends on Balancing Supply and Demand

A recent report from John Burns Real Estate Consulting provides illuminating data on our evolving housing landscape. As the firm notes, builder sentiment has turned decidedly less upbeat amid inflation and rising mortgage rates. New home sales slowed in many markets as affordability eroded, though incentives are partly offsetting declines.

Builders cite website traffic fading since September, which they attribute to higher interest rates. Rate buydowns below 6% are now critical to drive sales, though costlier to finance.

On resales, listings fell 13% annually across top metros as rates “lock in” owners. But inventories rose monthly from May to September as demand softened. Homes are taking longer to sell with fewer buyers able to stretch budgets.

These trends of moderating builder optimism, incentivized sales, creeping resale inventory, and lengthening marketing times signal a downshifting market. As John Burns notes, housing dynamics have shifted enormously from a year ago.

Overall, data indicates housing has passed peak growth and entered a cooler phase. With affordability stretched thin, stability hinges on balancing supply increases with tempered demand. If inventories rise steadily and rates ease modestly, the market could chart a healthy course avoiding overcorrections. But resilience will require nuance from builders, policymakers, and buyers alike.