Used car prices are surging. Here's why you should buy now

For nearly a year, the average used vehicle in the United States had been edging toward affordable again for millions of people. Now, with the supply of used vehicles failing to keep up with robust demand, prices are creeping up again, with signs pointing to further increases ahead.

Well, it was nice while it lasted.

For nearly a year, the average used vehicle in the United States had been edging toward affordable again for millions of people. The relief felt belated and relatively slight, but it was welcome nonetheless.

From an eye-watering peak of US$31,400 in April of last year, the average price had dropped 14 per cent to $27,125 early this month.

Now, with the supply of used vehicles failing to keep up with robust demand, prices are creeping up again, with signs pointing to further increases ahead. So many buyers have been priced out of the new-car market that fewer trade-ins are landing on dealer lots. Deepening the shortage, fewer used vehicles are coming off leases or being off-loaded by rental car companies.

Average list prices for used cars have edged up by about US$700 in the past month, and Alex Yurchenko, chief data officer for Black Book, which tracks prices, expects them to keep rising at least into summer.

"If you have to buy a used vehicle," he suggested, "right now would be a good time."

Pete Catalano, a dealer in Independence, Missouri, near Kansas City, has been struggling to get his hands on enough affordably priced cars. Typically, Catalano and his daughter, who co-own Stadium Auto, would have about 50 vehicles on their used-car lot near Arrowhead Stadium. They now have only about half as many. Some of their rival dealers, Catalano said, enjoy a competitive advantage because they can afford to offer financing to buyers with poor credit.