It’s tempting to blame September’s sales weakness on the lingering impacts of Hurricanes Harvey and Irma. But those storms' effects, while severe, are largely localized to the Southeast and don’t explain the full, national sales slowdown we’re experiencing. Focusing on those short-term, localized disruptions only distracts from the bigger picture.
It might be tempting to get overly excited by September’s existing home sales gains, however small, especially after three disappointing months in a row and in the wake of a string of incredibly disruptive hurricanes. But focusing on the short-term distracts from the bigger picture. Sales fell year-over-year for the first time since last July, and the reason is abundantly clear: It’s simply impossible to sell more homes when the number of homes for sale keeps falling. And the parts of the market most in need of more homes for sale, the low-to-middle segments, are also those experiencing the biggest inventory shortfalls. The laws of supply and demand are clear – low supply and high demand push prices up, making it even more difficult for first-time buyers and buyers of modest means to gain a foothold in the market. The housing market right now is a lot like an express train that has left the station. For those homeowners already on board, able to use the equity in their own homes and historically low mortgage interest rates to afford to trade up into higher market segments where there is more selection, the ride is relatively smooth. But for those entry-level and first-time buyers waiting at the platform, getting on the train before it passes is incredibly difficult.
