In today’s residential real estate market the number of homes available for sale is one of the most important measures of market health. The shortage we have experienced in Northern VA of available housing inventory is the major reason for the double-digit price appreciation over the last two years. This shortage is the reason many would-be purchasers are frustrated; However, signs of relief are finally appearing.

According to realtor.com recent research, active listings have increased over the last few months. They define active listings as:

“The active listing count tracks the number of for sale properties on the market, excluding pending listings where a pending status is available. This is a snapshot measure of how many active listings can be expected on any given day of the specified month.”

What is a normal year?

In a normal year, housing inventory increases throughout the summer months, starts to tail off in the fall, and then drops over the winter. Below shows this trend along with the month active listings peaked in 2017, 2018, and 2019.

What happened last year?

Last year, the trend was different in Northern VA. Historical seasonality wasn’t repeated in 2020 since many homeowners held off on putting their houses up for sale (See graph below). In 2020, active listings peaked in April, and then fell off substantially for the remainder of the year. This was driven by the pandemic.

What’s happening in 2021?

Driven by the decline of active listings in 2020, 2021 began with record-low housing inventory in Northern VA and across much of the country. However, the good news for home buyers and a normal market, we’ve been building inventory over the last several months as more listings come to the market:

The three main reasons listings continue to increase throughout this fall and into the winter.

1. Pent-up selling demand – Northern VA homeowners may be more comfortable putting their homes on the market as more and more people get vaccinated.

2. New construction is take off in some areas – New construction is not included in the realtor.com numbers above, which would show an even higher inventory increase. Even so, as more new homes are built, there will be more options for current homeowners to consider when they sell.

3. The end of forbearance will create some new listings – Most experts believe the end of the forbearance program will not lead to a wave of foreclosures for several reasons. The main reason is the level of equity homeowners currently have in their homes. Many homeowners will be able to sell their homes instead of going to foreclosure, which will lead to some additional listings on the market.

Bottom Line

If you’re in the market to buy a home, stick with it. There are new listings becoming available every day. If you’re thinking of selling your house, you may want to list your home before this additional competition comes to market.