Over the past few years the housing market has improved.  In both 2012 and 2013 the United States housing market had shown growth in many areas.  However, there are new factors that are slowing down this recovery dramatically.  Some of these major factors contributing to the market decrease include; rapid home-price appreciation, adverse weather conditions, and the short sale tax credit expiration.  But most experts agree that the biggest cause for this recent downfall is the lack of inventory of homes available for sale. 

This lack of housing available becomes an issue of supply and demand.  With the amount of homes for sale decreasing, the houses that actually are for sale will continue to rise in price (presenting an unfortunate problem for home buyers in today’s market).  In addition, the increase in price often results in the homes being listed at a price higher than what they are being appraised for.  This results in many buyers eliminating those homes as options and causes the number of homes available to appear even smaller.

The National Association of Realtors reported recently that the housing inventory fell yet another 9.3%, decreasing the amount of homes available to buyers.  Take a look at this chart of the amount of existing homes for sale over the past 10 years.  

What is causing this unusually low amount of homes for sale?  The lack of new home construction has a big part to do with it.  No new homes available only enhance the fact that less people are selling.  Of the 1.5 million new homes being constructed each year, only about 800,000 new homes are actually hitting the market. 

But, the main reason for the recent lack of inventory in the housing market has to do with existing homes not being put up for sale.  Previously owned homes sell more than new homes at a ratio of 10:1.  There is no way for potential buyers to purchase a home and help the market recover if there are no homes available to them. 

Potential buyers need to be willing to make compromises if they are set on buying house in the near future.  These compromises might include spending a little more to get what they really want, or even expanding their desired location.