A Look at Housing Supply and What It Means for Sellers

Appfolio Websites • August 5, 2021

A Look at Housing Supply and What It Means for Sellers



One of the hottest topics of conversation in today’s real estate market is the shortage of available homes. Simply put, there are many more potential buyers than there are homes for sale. As a seller, you’ve likely heard that low supply is good news for you. It means your house will get more attention, and likely, more offers. But as life begins to return to normal, you may be wondering if that’s something that will change.

While it may be tempting to blame the pandemic for the current inventory shortage, the pandemic can’t take all the credit. While it did make some sellers hold off on listing their houses over the past year, the truth is the low supply of homes was years in the making. Let’s take a look at the root cause and what the future holds to uncover why now is still a great time to sell.

Where Did the Shortage Come From?

It’s not just today’s high buyer demand. Our low supply goes hand-in-hand with the number of new homes built over the past decades. According to Sam Khater, VP and Chief Economist at Freddie Mac:

“The main driver of the housing shortfall has been the long-term decline in the construction of single-family homes.”

Data in a recent report from the National Association of Realtors (NAR) tells the same story. New home construction has been lagging behind the norm for quite some time. Historically, builders completed an average of 1.5 million new housing units per year. However, since the housing bubble in 2008, the level of new home construction has fallen off (see graph below):The same NAR report elaborates on the impact of this below-average pace of construction:

“. . . the underbuilding gap in the U.S. totaled more than 5.5 million housing units in the last 20 years.” 
“Looking ahead, in order to fill an underbuilding gap of approximately 5.5 million housing units during the next 10 years, while accounting for historical growth, new construction would need to accelerate to a pace that is well above the current trend, to more than 2 million housing units per year. . . .”

That means if we build even more new houses than the norm every year, it’ll still take a decade to close the underbuilding gap contributing to today’s supply-and-demand mix. Does that mean today’s ultimate sellers’ market is here to stay?

We’re already starting to see an increase in new home construction, which is great news. But newly built homes can’t bridge the supply gap we’re facing right now on their own. In the State of the Nation’s Housing 2021 Report, the Joint Center for Housing Studies of Harvard University (JCHS) says:

“…Although part of the answer to the nation’s housing shortage, new construction can only do so much to ease short-term supply constraints. To meet today’s strong demand, more existing single-family homes must come on the market.”

Early Indicators Show More Existing-Home Inventory Is on Its Way

When we look at existing homes, the latest reports signal that housing supply is growing gradually month-over-month. This uptick in existing homes for sale shows things are beginning to shift. Based on recent data, Odeta Kushi, Deputy Chief Economist at First American, has this to say:

“It looks like existing inventory is starting to inch up, which is good news for a housing market parched for more supply.”

Lawrence Yun, Chief Economist at NAR, echoes that sentiment:

“As the inventory is beginning to pick up ever so modestly, we are still facing a housing shortage, but we may have turned a corner.”

So, what does all of this mean for you? Just because life is starting to return to normal, it doesn’t mean you missed out on the best time to sell. It’s not too late to take advantage of today’s sellers’ market and use rising equity and low interest rates to make your next move.

Bottom Line

It’s still a great time to sell. Even though housing supply is starting to trend up, it’s still hovering near historic lows. Let’s connect to discuss how you can list your house now and use the inventory shortage to get the best possible terms for you.


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Home Projects That Boost Value

By KCM • June 14, 2025
Home Projects That Boost Value Whether you’re planning to move soon or not, it’s smart to be strategic about which home projects you take on. Your time, energy, and money matter – and not all upgrades offer the payoff you might expect. As U.S. News Real Estate explains: ". . . not every home renovation project will increase the resale value of a home. Before you invest in a swimming pool or new addition, you should consider whether the project will pay itself off by getting prospective buyers in the door when it’s time to sell. " That’s why, before you pick up a power tool or call a contractor, your first step should be talking to a local agent. Planning Ahead Pays Off If you plan to move relatively soon, you’ll want to get a jump start on your to-do list. And even if moving isn’t on your radar yet, life can change quickly – and a new job, a growing family, or shifting priorities can fast-track your plans. You don’t want to be scrambling to fix up your home if your timeline changes. Smart updates now = fewer headaches later. By planning ahead, you can spread out the work over time, which is easier on your wallet and your stress levels. Plus, you’ll get to enjoy the upgrades while you’re still living there and have the peace of mind your house is ready to impress when it's time to list. What Buyers Want (and What’s Actually Worth Doing) If you’re not sure which projects are worth your time and money – here's some information that can help. A study from the National Association of Realtors (NAR) shows which upgrades typically offer the best return on your investment (ROI) (see graph below): If an update you're already thinking about overlaps with those high-ROI upgrades, great. Odds are it'll improve your quality of life now and your home’s value later. But don’t take this list as law. This is based on national data and is the sort of thing that's going to vary based on what’s most sought-after where you live. That’s where your agent comes in. As an article from Ramsey Solutions says: “ The best way to gauge what you can expect in terms of resale value on home improvements—especially if you’re planning to sell soon—is to talk to a real estate agent who is an expert in your market. They’re sure to know the local trends, and they can show you how other homes with the features you want to add are selling. That way, you can make an educated decision before you start ordering lumber and knocking down walls.” You'll just want to make sure you don't overdo it. Too many high-end updates can make your home the priciest in the neighborhood. That might sound great, but it can actually turn buyers away if it's outside their expected price range for the area. The right agent will help you make smart updates that buyers will love, without going overboard. Whether the project is big or small, it pays to be strategic. And an agent is a key piece of that strategy. Bottom Line It doesn’t matter whether you plan to move soon or not, it can still pay off to make strategic updates that’ll help you love your home now and stand out later. What’s one upgrade you’ve been thinking about – and wondering if it’s worth it? Let’s make sure it’ll pay off when the time comes.

Why You’ll Want a Home Inspection

By KCM • June 13, 2025
Once your offer is accepted, an inspector will assess the condition of the house, including things like the roof, foundation, plumbing, and more. That information is incredibly important and paves the way for you to re-negotiate with the seller, as needed. So, you don’t want to skip this step. An inspection is your chance to avoid costly headaches and get peace of mind. Let’s connect to talk about other ways to make your offer stand out.

Housing Market Forecasts for the Second Half of the Year

By KCM • June 12, 2025
Housing Market Forecasts for the Second Half of the Year From rising home prices to mortgage rate swings, the housing market has left a lot of people wondering what’s next – and whether now is really the right time to move. There is one place you can turn to for answers you want the most. And that’s the experts. Leading housing experts are starting to release their projections for the rest of the year. These insights will give you clarity – and a little more optimism than you might expect. Business Insider sums up the forecasts (and why they’re good news for you): “As mortgage rates go down this year, affordability may improve slightly for homebuyers. Inventory is also expected to grow, which should help moderate price growth and make finding a home easier.” Let’s break it down. 1. Mortgage Rates Should Come Down (Slightly) While a major drop isn’t on the table, forecasters are calling for a modest decline in rates in the months ahead as the economic outlook becomes more certain. Based on the information we have right now, here’s a look at where they say rates should be by year-end (see graph below): Even this slight decrease is a welcome change. A seemingly small decline can still help bring down your future mortgage payment and give you a bit more breathing room in your budget. Just remember, everything from inflation to employment and broader economic shifts will have an impact on where rates go from here. So, don’t try to time the market. And do expect some volatility along the way. 2. Inventory Will Continue To Grow Inventory has already improved a lot this year. A big portion of the growth the market has already seen is because homeowners are getting tired of sitting on the sidelines. They’ve tried the wait and see approach with rates, and it hasn’t really paid off. And at a certain point, you need to move no matter what the market is doing. This is one reason more homes have been listed lately. And experts say that should continue. As Lance Lambert, Co-founder of ResiClub, says: “The fact that inventory is rising year-over-year . . . strongly suggests that national active housing inventory for sale is likely to end the year higher. ” If rate forecasts pan out as the experts say, that could be enough to tip some more sellers off the fence and back into the market – giving you even more options for your move. 3. Home Prices Are Moderating As more homes hit the market, there will also be less upward pressure on home prices . Expert forecasts are still calling for growth, but the pace of that growth is slowing down as inventory climbs. The average of all 7 forecasts shows prices will rise about 2% this year (see graph below): That means you could finally get a little bit of relief from rapidly rising home prices . When you combine the forecast for healthier price growth with projections for slightly lower mortgage rates, that could mean more buying power in the months ahead. Keep in mind, though, the housing market is hyper-local. So, this is going to vary by area. Some markets will see prices climbing higher. And some may even see prices dip a little if inventory is up significantly in that location. So, lean on a local agent for insights into what’s happening in your area. Bottom Line So, if you want or need to move this year, know that the experts say things should start looking up. Let’s connect so you can take advantage of any market shifts that work in your favor.
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