Why Do Home Prices Continue To Rise?


The price of any item is determined by the supply of that item, as well as the market demand.

The National Association of Realtors (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their Realtors Confidence Index. Their latest edition sheds some light on the relationship between Seller Traffic (supply) and Buyer Traffic (demand).  

Buyer Demand

Buyer Traffic

The map above was created after asking the question:

“How would your rate buyer traffic in your area?”

The darker the blue, more buyers are looking for homes in that area. Only four states came in with a weak demand level.  

Seller Traffic       

   Seller Supply The Index also asked:

“How would you rate seller traffic in your area?”

As you can see from the map on the left, the majority of the country has weak Seller Traffic, meaning there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for their dream homes.          

Bottom Line

Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet the buyer demand, prices will continue to increase.  

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