The lack of supply was determined to be the main reason why the housing market is still underperforming, Diane Click of CNBC reported.
Although home sales slightly increased in February compared to January, apparently it was not enough. Below 5 million units annual rate is still unhealthy according to realtors cited in the CNBC video report.
Winter may have worsened the sales in February 2015 especially in the Northeast by 6.5%, as stated by CNBC, but still, the Realtors association does not blame low sales in general, on winter.
Lawrence Yun, chief economist for Realtors, told CNBC that it's "all about inventory."
Based from the past numbers and data, supply should have increased more than the reported gain of less than 2 percent this year, from January to February, Reuters informed. According to the Realtors Association, the growth in the listings available in the market should have an average of 5.6 percent during this period because, usually at this time, sellers prepare for the uptick of homebuying in spring. This should have been the busiest time in preparation for the April to August selling season, the Realtors Association added.
With these numbers, it may affect the whole year of the housing market, Bill Banfield, Vice President at Quicken Loans in Detroit said.
"The next couple months are some of the most critical of the entire year for housing and sluggish numbers may continue if inventory doesn't increase, either through new home construction or by more existing owners listing their homes,'' Banfield told Reuters.
Shouldn't builders build more?
Builders are then pressured to build more, but the situations are not ideal. "Smaller local builders are not in the game. They don't have access to credit," Yun explained, adding that large builders, on the other hand, cater to the wealthier buyer's market.
Effects of lack of supply
CNBC also reported that because of lack of supply, prices are being pushed up again with a rate of " 7.5 percent year over year to a median sale price of $202,600 in February." It is an "unhealthy" reacceleration, Yun said, so even if the prices are relatively affordable this time, it will soon weaken in time, CNBC explained.
Another factor is the rising rents that makes it hard for homeowners to pay for their the needed down payment.The determining factor now is the supply and it must increase in time to soften its blow.
However, Peter Boockvar, managing director and chief market analyst of The Lindsey Group, told CNBC that it also boils down to right pricing.
Bookvar continued, "This will change at some point, and we'll get a nice rebound in housing, as household growth continues and rents get too expensive. A slowdown in the pace of home price gains though is needed."
