The real estate market has seen a significant increase in the supply of homes for sale, with active listings growing by 36% nationwide compared to last year. This marks the 10th consecutive month of annual growth in inventory levels. However, despite this rise, the supply of homes is still 26% lower than pre-pandemic levels in August 2019. The growing inventory has been attributed to homes staying on the market for longer periods, leading to changes in pricing dynamics.
As the supply of homes increases, sellers are adjusting their strategies in response to the changing market conditions. With more homes available for sale, price cuts have become more common, asking prices are stabilizing, and properties are taking longer to sell. Data shows that there were fewer new listings in August compared to the previous year, indicating that sellers may be adopting a more cautious approach amidst the evolving market trends.
Regional Disparities
While the increase in inventory is a nationwide trend, certain cities have experienced more significant gains in housing supply. Areas like Tampa, San Diego, Miami, Seattle, and Denver have seen inventory levels surge by 60% to 90% compared to the previous year. Regionally, the South has witnessed a 46% rise in active listings, followed by the West with a 35.7% increase, the Midwest with a 23.8% growth, and the Northeast with a 15.1% uptick in available homes.
Extended Selling Times
The influx of inventory has led to homes spending more time on the market before being sold. In August, the average number of days a property remained listed was 53, which is seven days longer than the previous year and the slowest pace for August in the last five years. Research indicates that for every 5.5 percentage point increase in the year-over-year number of active listings, the market slows by one day. This means that some markets could see properties staying on the market for 15-20 days longer than in the previous year.
The increase in housing supply and extended selling times are starting to have an impact on prices. The percentage of homes with price reductions rose to 19% in August, up by 3 percentage points from the prior year. The median list price has also seen a decline of 1.3% year over year. This decrease can partly be attributed to the changing mix of homes on the market, with more smaller properties being listed. However, prices are still significantly higher than they were in August 2019, showing that the market is still adjusting to the new inventory dynamics.
The rise in inventory levels in the real estate market is reshaping the dynamics of buying and selling homes. Sellers are facing a more competitive environment, with properties taking longer to sell and prices beginning to adjust accordingly. Buyers, on the other hand, are presented with more choices and potential opportunities in a market that is evolving rapidly. As inventory continues to grow, it will be interesting to see how both buyers and sellers adapt to the changing landscape of the real estate market.