The Rules of Supply and Demand Are Alive and True

by Tyler Osby on August 27, 2009

Confidence Is Increasing

It’s no wonder that builder confidence is soaring — their inventory of homes for sale is depleting at a furious pace.  For the 4th straight month, New Home Sales gained, posting the best numbers since last September’s meltdown and handily beating economist expectations.

The available supply of homes is down to 7.5 months nationwide.

It’s further evidence that the housing market may have bottomed at some point this past spring.

Contributing Outside Factors

To be sure, the strong housing data is, in part, a reaction to three outside factors:

  1. Low mortgage rates
  2. An expiring government tax credit
  3. Hefty builder incentives

But, buyers are buyers and the clearing out of outstanding inventory provides terrific support for home prices.  It also gives them reason to rise. 

Don’t Wait Too Long

Coupled with the blowout Existing Home Sales numbers from July, therefore, this months’ New Homes Sale report may be a signal that the Buyers’ Market is ending and the Sellers’ Market is beginning.

If you’re planning to buy a home this year or next, it may be time to get a move on. Wait too long, and prices may be up.

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