More homes may be hitting the market lately, but they’re not the right type of homes, the nation’s largest group of real estate agents says.
America’s housing market is currently suffering from a major “mismatch.” Homes are for sale, yes, but they’re not homes that most home shoppers can afford, according to the National Association of Realtors (NAR).
The problem is affecting entry-level and middle-income buyers most, NAR said.
Middle-income households can now afford just 23% of current home listings.
Housing market mismatch puts homes out of reach for many
Americans can afford about a quarter fewer home listings than they could in a balanced market, a new report from NAR and Realtor.com shows. The report uses a “listing-income alignment score” to determine how well home listings in a given market match incomes in the area.
The numbers weren’t great, at least for your average home shopper.
Nationally, the alignment score came in just below 75%. This indicates current listings are more “skewed” toward higher-income buyers, according to the NAR.
“Too much of the inventory available today remains concentrated at higher price points, leaving a shortage of options for entry-level and middle-income buyers,” said Nadia Evangelou, principal economist at the NAR. “This is preventing home sales from reaching pre-pandemic levels.”
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According to the analysis, middle-income households — those who take in about $75,000 per year — can afford less than a quarter of today’s listings. The housing market would need about 311,000 more homes listed under $261,000 to become “balanced” for middle-income earners.
“The data makes clear that more inventory alone won’t be enough to unlock the housing market,” said Danielle Hale, chief economist at Realtor.com. “A true recovery requires homes at the right price points. Until the supply of entry-level and middle-market homes grows to meet demand, many buyers will continue to find the market out of reach despite headline improvements in affordability and inventory.”
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Midwest homebuyers see the most balanced housing markets
While the national numbers weren’t ideal, some more localized housing markets didn’t fare too badly. The Midwest actually has quite a few markets that even tipped into “balanced” territory, according to the report.
Toledo, Ohio, for example, came in with a score of 107%. Other balanced markets in the area included St. Louis, Akron, Ohio, Pittsburgh, and Detroit.
Some Southern markets didn’t quite fall into balance, but they did see marked improvement over year-ago numbers, NAR’s data shows. Lakeland, Florida, saw its alignment score jump over 18 points, while McAllen, Texas, and Las Vegas jumped 14%.
Unsurprisingly, California had some of the most constrained housing markets in the nation. Los Angeles, San Diego, and Oxnard top the top three spots, followed by Providence, Rhode Island, and Boise City, Idaho.
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