The housing supply in the U.S. has been closely monitored for decades. There have been ebbs and flows, but we’re currently experiencing one for the record books. The pandemic certainly contributed to historic lows, but there are several other mitigating factors that have led to the lack of nationwide inventory. However, the good news is that this shortage can’t last forever. That means now is the time for investors and buyers to plan for the future, when the tide finally turns.

Let’s take a quick look at how we got here. Seasoned real estate agents will tell you that housing shortages typically occur when there is less than six months of inventory on the market. As of December 2020, there was only a 1.9-month supply of homes. To combat this shortage, Freddie Mac estimated the market would need to add another 2.5 million properties to potentially balance out the gap between supply and demand. These factors produced a strong seller’s market, which drove up prices across the country. The Case-Shiller Index shows home prices jumped from 7% to 19% from September 2020 to June 2021. For obvious reasons, income growth didn’t rise as sharply, which ultimately priced many families out of the market altogether.

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