The supply of homes for sale in the U.S. remains historically low but is rising rapidly. In August, active home listings increased by 36% compared to the same month last year, marking the 10th consecutive month of growth, according to a report from Realtor.com. However, inventory is still 26% lower than in August 2019, before the pandemic significantly impacted the housing market.
As the supply of homes grows, fewer new listings are hitting the market. In August, new listings were down 1% compared to the previous year. The increase in supply is largely due to homes sitting on the market longer, leading sellers to pull back. Homes are now taking longer to sell, and price reductions are becoming more common, indicating a shift in the housing market.
“This August, with more homes available, price cuts are frequent, asking prices are moderating, and homes are staying on the market longer,” said Danielle Hale, chief economist at Realtor.com. While mortgage rates have dropped following a Federal Reserve rate cut, both buyers and sellers appear to be waiting for further rate declines, contributing to a slowdown in housing market activity.
Despite the drop in mortgage rates, applications for home loans are down about 4% from a year ago, according to the Mortgage Bankers Association. The average rate for a 30-year fixed mortgage is 75 basis points lower than it was last year, but this hasn’t spurred a significant increase in homebuying.
Certain cities are seeing dramatic increases in housing inventory. Tampa, Florida, has experienced a 90% increase in listings, while San Diego, Miami, Seattle, and Denver have seen inventory jumps of 80%, 72%, 69%, and 67%, respectively. Regionally, active listings rose the most in the South (46%), followed by the West (35.7%), Midwest (23.8%), and Northeast (15.1%).
As homes take longer to sell, prices are beginning to soften. The average home spent 53 days on the market in August, seven days longer than the previous year, making it the slowest August in five years. More supply and slower sales are leading to price reductions, with 19% of homes in August seeing price cuts, up 3 percentage points from the previous year. The median list price fell 1.3% year-over-year, though home prices are still 36% higher than in August 2019.
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