Slim inventory pushes up prices of cars

Lexus of Route 10, a car dealership in Morris County, told Fox Business that it only has about a week's worth of new cars on hand. 

That illustrates a problem across the country: limited car inventory is driving up prices. The average price for a new car ($47,000) is up more than 12% over the last year. And used car prices are up, too. The average price of a used car is about $28,000, which is a 16% increase in the last year. 

At the beginning of June, about 850,000 new vehicles were on lots across the country, according to J.D. Power. That's down from almost 1 million a year ago and down from nearly 2 million in 2020. That slim selection is keeping prices high and even creating bidding wars for some luxury cars. 

"Someone came in they offered $20,000 over list price. I had somebody personally who was interested in the car, it went $30,000 over list price. And it wound up selling at $50,000 over list price," Lexus of Route 10's Thomas Maoli said. "People are bidding on cars — they want to get their hand on them. There's no inventory."

But with climbing gas prices and rising interest rates, some analysts say we could see car prices start to come down. 

"Those things are kind of working to help get us back to balance. But there's no scenario I see where suddenly prices fall off a cliff," TrueCar's Nick Woolard said. "If anything, that balance will hit it gently as the data has shown thus far."

If you're in the market for a new car this year, stay flexible, experts say. If you have your heart set on a particular make and model with certain bells and whistles, you could be waiting up to a year for your new ride.