The long-awaited recovery in home inventory is in full swing. It’s not being driven by a rise in new listings but by the ongoing slowdown in demand from buyers, according to Realtor.com
With three straight months of record-breaking inventory gains, the supply of available single-family homes is replenishing at a rate not seen in recent times.
The number of active listings on the market at a given time was up nearly 31 percent in July compared to the same period the year before, according to a report Tuesday from Realtor.com. Despite this, the third consecutive month of record annual gains inventory remained 44 percent below its levels from July of 2019.
“The U.S. housing market continues to move toward more evenly balanced supply and demand compared to the 2021 frenzy,” Hale said in the report. “Our July data shows elevated mortgage rates left many buyers tightening their budgets and sellers responding with price reductions, while home shoppers who kept searching saw more available options.”
Still, the market has a long way to go before sellers have to give up their hefty advantages over buyers in negotiations.
List prices remain near all-time highs, and sellers are still spending less time on the market than they did before the pandemic struck and upended the housing market with a wave of new demand.
Since March of 2020, the number of active listings on the market at any one time has experienced a deep and prolonged decline as buyers and sellers agreed to a high volume of home transactions — and quickly.
But in more recent months the year-over-year recovery in inventory has been noteworthy not only for its length but also for its magnitude.
In May, inventory reached what was at the time an all-time high annual gain of 8 percent. By June, inventory was up 19 percent year over year. July’s 31 percent number now dwarfs both record-breaking figures.
Meanwhile, the inventory gains have occurred despite declines in the number of new listings nationwide. In all, nearly 3 percent fewer homes were put on the market in July than had been during the same period last year.
Inventory has also been rising even though homes were still selling slightly faster in July of this year than they were the year before. The typical home sat on the market for 35 days before, compared to 37 days in July of 2021.
There is evidence that sellers are becoming increasingly wary of overreaching with their asking prices in many U.S. markets. On a per-square-foot basis, asking prices were up 15.5 percent year over year, down from a 16.2 percent year-over-year rise the month before.
Overall, a well-priced home is still expected to sell very quickly in most markets due to the market’s present cocktail of seller-friendly conditions, Hale said.
“Plus, many sellers have a substantial equity cushion to leverage, thanks to the past decade of rising prices,” Hale said in the report. “Whether or not they take advantage of these opportunities will be key to inventory trends moving forward.”