According to the RE/MAX President and CEO, the U.S. is short 4.5 to 5 million homes. Find out what he thinks that means for the housing market in the year ahead.
In the current U.S. housing market, the inventory of homes for sale remains low. But according to RE/MAX President and CEO Nick Bailey, the issue might start to subside in the coming months.
He shared his insights on a recent episode of CNBC’s “Closing Bell Overtime.”
A long slowdown in new construction has led to a U.S. shortfall of 4.5 to 5 million homes and rising interest rates have kept many buyers on the sidelines, said Bailey, adding that signs of better days have recently emerged.
High interest rates are a key factor in the ongoing inventory shortage. In a concept known as “golden handcuffs,” many homeowners with a low interest rate want to keep it, even if they feel ready to move to a new home.
“The spring market is generally when we see most of the move-up buyers come to the market, and that didn’t happen in 2023 for that very reason. Ninety percent of [U.S.] homeowners have a rate under 5%, and of that, 50% have a rate less than 3.5%,” Bailey explained.
Some, however, choose to sell anyway – especially as they encounter life changes, like getting married or having children. And when those homes hit that market, there is ample demand for them.
“There are 45 to 46 million millennials who are part of this pent-up demand for household formation in the years ahead, so there’s a big population that’s striving for housing,” Bailey said.
To learn more about the current housing market – including Bailey’s advice for first-time buyers – tune in to the CNBC news segment.
Article originally appeared on RE/MAX.com.
