Housing Supply in the Sacramento Region

The Sacramento region continues to experience a tightening of the housing supply. For another consecutive month, buyer activity has outpaced seller activity throughout the area. There are two likely and positive sources for the continuous influx of buyers. Many renters are taking advantage of the incredibly low interest rates to become first time home buyers and the expanding work-from-home model is allowing people to migrate to more affordable areas of our state. In comparison, many home owners are choosing to not sell and are instead refinancing their homes while embarking on large and small home improvement projects. This has been great for area property values.

In June 2020, we had a 1.36 months supply of home in the region. In July, that number had dropped down to a 0.876 months supply. August has seen another significant decline in housing supply as we are now at a 0.67 months supply of available homes. Today there are 1,355 homes available / active on the market, compare that to the 2,873 that have an accepted offer and are in escrow. For every house that comes on the market, more than two houses go pending sale. In short, the lack of inventory is significant and there are currently no signs of that improving in September.

There are other influences to consider. The national unemployment rate improved, dropping to 8.4% in August as 1.37 million jobs were added. Will there be additional buyers beginning home searches as more people get back to work? Kids are getting back to school across the region, which traditionally marks a slowing of buyer activity. With all area schools in distance learning, will that trend continue? Interest rates for home loans have been in the 2.5%-3.0% range for weeks. Will interest rates continue to stay this low, or will they start to creep up? And lastly, are there any potential scenarios where sellers will be seriously motivated to put more homes up for sale?