Inventory rose due to a steep drop in homebuyer demand and homes that are spending more time on market while sellers pulled back on listing new properties, according to Realtor.com data.
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The number of active listings clocked in at 26.6 percent higher in August compared to a year before, according to new housing data from Realtor.com released Thursday. However, fewer sellers believe it’s a good time to transact, and the number of new listings hitting the market continued a two-month decline.
Inventory continued to rise due to a steep drop in homebuyer demand as homes lingered longer on the market, according to the data.
Together, the report showed that buyers still in the market have more options despite an ongoing pullback by sellers and broader deceleration nationwide.
“Sellers may feel that they have missed the peak, or that it’s too difficult and expensive to buy another home at this time given the costs of financing,” the Realtor.com economists wrote.
The number of new listings has dropped for two months straight, and the number of newly listed homes is down 13.4 percent compared to a year before, as a growing share of sellers believes it’s a bad time to sell a house.
Past studies have found that fewer people believe it’s a good time to sell their home, and three-quarters of potential sellers said they had concerns about selling now.
The data show that after two years of historically low inventory, the anticipated jump in homes for sale is largely not happening nationwide as both buyers and sellers balk.
Active listings remained 43.8 percent below historical averages in the three years before the pandemic, according to the report.
Bill McBride, author of the CalculatedRisk blog about real estate, has dubbed the phenomenon a “sellers’ strike.” He suggested focusing on new listings as an indicator of the market, rather than overall inventory.
While the average time on market remains well below historical averages, the average time on market climbed in July. It now takes 42 days to sell the typical home, up five days compared to last year.
For buyers willing to purchase amid high interest rates and near-record high home prices, that could be a good thing, according to the report.
“This fall, a more moderate pace of homeselling, more listings to choose from, and softening price growth will provide some breathing room for buyers searching for a home during what is typically the best time to buy a home,” the economists wrote.
But buyers have shown a passive interest in homebuying in recent months, and pending inventory — homes that were at various stages of the sales process but not yet closed — was down 21.9 percent in August.
Together, the data appear to show inventory rose due to a slowdown in home buying and despite a drop in new listings. That may be helping to slow price appreciation.
August marked the third month in a row of decelerating listing prices, according to Realtor.com.
Western markets lead the way in deceleration, according to the report. Markets throughout the West had bigger jumps in inventory, more price drops on listings and decelerating price growth.
“The share of homes having their price reduced increased from 11.0 percent last August to 19.4 percent this year and is close to typical 2017 to 2019 levels,” the report said.