For sale signs hang outside homes for sale in Los Angeles, California on August 16, 2024. The U.S. real estate industry’s rules governing broker commissions will change on August 17 as part of a legal settlement between the National Association of Realtors and home sellers. (Photo by Patrick T. Fallon/AFP) (Photo by Patrick T. Fallon/AFP via Getty Images)
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The supply of homes for sale remains low by historical standards but is growing rapidly.
Nationally, the number of active home listings in August was 36% higher than the same month last year, according to a new report from Realtor.com. This is the tenth consecutive month of annual growth. However, supply remains 26% below pre-pandemic levels in August 2019.
As inventory builds, sellers are retreating. The number of new homes listed in August (-1%) was lower than the same period last year. The increase in supply is due to homes staying on the market longer.
“As the number of homes on the market continues to climb this August, price cuts are becoming more common, asking prices are slowing, and homes are taking longer to sell,” Danielle Hale, chief economist at Realtor.com, wrote in a press release. Long. “Widely expected rate cuts from the Federal Reserve have already brought mortgage rates down, but it appears some buyers and sellers are waiting for further cuts. “
This can be seen in the weekly mortgage data. According to the Mortgage Bankers Association, home purchase loan applications are down about 4% compared with this time last year. This is despite the fact that the average interest rate on a 30-year fixed mortgage is now about 75 basis points lower than it was then.
While supply is increasing in most cities, some are seeing huge growth. Inventory in Tampa, Florida is more than 90% higher than a year ago. San Diego is up 80%, Miami is up 72%, Seattle is up 69%, and Denver is up 67%.
From a regional perspective, active listings increased by 46% in the South, 35.7% in the West, 23.8% in the Midwest, and 15.1% in the Northeast.
More supply results in homes staying on the market longer. The typical home spent 53 days on the market in August, seven days more than a year earlier and the slowest August growth rate in five years.
“We find that for every 5.5 percentage point year-over-year increase in active listings, the market slows by about one day,” said Ralph McLaughlin, senior economist at Realtor.com. “Given the rapid inventory growth we’re seeing now, that’s likely to That means some markets may have 15 to 20 more days of change than last year.”
More supply and longer sales ultimately translate into lower prices. The proportion of houses with reduced prices rose to 19% in August, an increase of 3 percentage points from August last year. The median list price decreased by 1.3% year-on-year. This is partly due to the wide variety of homes on the market, with more and more tiny homes coming on the market. Prices are still 36% higher than in August 2019.
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