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Prospective homebuyers must move fast because of a shortage of homes for sale

A MARTÍNEZ, HOST:

It's a seller's market for housing these days.

LEILA FADEL, HOST:

The only thing is there aren't very many sellers. Home sales fell last month, even as the price of homes climbed to a record high for April.

MARTÍNEZ: NPR's Scott Horsley joins us now to sort through all this. Scott, my wife and I are one of those couples. We spend our weekends going through open houses with no intent to buy. So (laughter) I don't see a lot of for-sale signs, though, anymore. Why is that?

SCOTT HORSLEY, BYLINE: You're right, A. There's a real shortage of existing homes for sale these days. So the limited number of homes that are on the market, they're like the last donut in the office break room. Christine Richardson's a realtor in Northern Virginia. She says 80% of the houses she sold this year had multiple offers, including one that had 18 people bidding on it.

CHRISTINE RICHARDSON: Eighteen buyers loved that house and took the time to sit down and put together their best offer. And they were all fabulous offers, but only one out of those 18 got to buy a house at the end of it. You know, I just feel so bad. And I have to be the one that makes the 17 (laughter) phone calls to say, I'm so sorry, but your client didn't get the house.

HORSLEY: That lopsided market is producing a windfall for sellers. The average home sold last month for just over $407,000. But Richardson also works with a lot of buyers. And so says - she says she'd much prefer to see a market that's more balanced between buyers and sellers.

MARTÍNEZ: All right. So what's throwing the market out of balance?

HORSLEY: Seven percent mortgages. You know, that's not only kept a lot of buyers on the sidelines, it's also discouraged a lot of sellers who don't want to give up the cheaper home loans they have now. Now, it is possible we'll see somewhat lower interest rates later this year. But it's starting to dawn on people that we're probably not going back to 3- or 4% mortgages anytime soon. So when a new baby comes along or a new job gets offered, some people are biting the bullet and making a move.

The number of homes on the market is starting to inch up. There are 16% more homes for sale now than there were a year ago at this time. And we're also seeing a modest comeback in first-time buyers. One out of three homes sold last month went to a first-time buyer. That's the largest share in more than three years. Now, of course, it can be a struggle for first-timers to come up with a down payment and meet these high monthly payments, but Milwaukee realtor Tom McCormick says, in some ways, first-timers have an advantage in a market like this.

TOM MCCORMICK: They don't know any different. All they know is what they hear in the media and what we tell them, which is you've got to be ready to be hyper-competitive. And they go, OK. Well, if that's what it takes, that's what it takes. Whereas that second-time buyer or third-time buyer, they're like, what are you - seriously? No. It wasn't like this last time. And they just kind of shake their head and go, wow.

MARTÍNEZ: I'm shaking my head as we speak, Scott. Any advice for someone trying to buy a house in a market like this?

HORSLEY: Yeah. If you're tripping over other people at the open house, chances are...

MARTÍNEZ: (Laughter).

HORSLEY: ...You're going to have competition. So don't think you could make a lowball offer and then sweeten it later. You've got to come out of the gate with your best offer. And realtor Jack Gaughan of Nashville says you have to be ready to move fast.

JACK GAUGHAN: That's important that you have all your financial documents and you've talked to a lender and had that all straightened out, 'cause the people who are able to move quickly are the ones who end up succeeding. It's, you know, the people that drag their feet, or aren't prepared to make an offer, or maybe get cold feet after they already make that initial offer - that's the ones that get burnt in the end.

HORSLEY: Some people are also looking at newly built houses. Because of the shortage of existing homes on the market, builders have been getting a bigger-than-usual share of home sales these days. But this morning, the Commerce Department reported that sales of new homes were also down last month.

MARTÍNEZ: All right. NPR's Scott Horsley. Thanks a lot, Scott.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.