When demand exceeds supply, a seller’s market develops. In other words, there are many interested buyers, but there is a scarcity of available real estate. Because there are fewer available homes, sellers have an advantage.
Economic factors- The local labor market heats up, attracting new residents and driving up home prices until more inventory can be built.
Interest Rates Trending Downward- Interest rates going down improves home affordability, generating more buyer interest, particularly among first-time home buyers who can afford larger homes as interest rates fall.
A Short-term Spike in Interest Rates- If they believe the upward trend will continue, “on the fence” buyers may be compelled to make a purchase. Buyers want to act quickly before their purchasing power (the amount they can borrow) dwindles.
Low Inventory- There are fewer homes on the market due to a lack of new construction. Because there are fewer units available, prices for existing homes may rise.
