The real estate market is experiencing a shift as the supply of homes for sale is rising rapidly. According to a recent report from Realtor.com, active listings in August saw a 36% increase compared to the previous year, marking the 10th consecutive month of annual growth. Despite this positive trend, inventory is still 26% lower than pre-pandemic levels in August 2019. As more homes become available on the market, sellers are starting to pull back, resulting in a decrease in new listings in August compared to the previous year.
The growth in supply has led to several noticeable changes in the market. Homes are now staying on the market for longer periods, leading to more price cuts, moderation in asking prices, and extended selling times. This shift is attributed to buyers and sellers waiting for further declines in mortgage rates following the recent Fed rate cuts. Weekly mortgage data shows a 4% decrease in applications for home purchase loans compared to the previous year, despite mortgage rates being significantly lower.
While the increase in supply is a national trend, certain cities are experiencing significant gains in inventory. Places like Tampa, Florida, have seen inventory levels rise over 90% compared to the previous year. Other cities such as San Diego, Miami, Seattle, and Denver have also reported substantial increases in available homes. Regionally, the South and West regions have witnessed the largest growth in active listings, further indicating the shift in market dynamics.
The surplus of homes and extended selling times are beginning to impact pricing in the market. The share of homes with price reductions in August increased to 19%, with the median list price down 1.3% year over year. This decrease can also be attributed to the change in the mix of homes available, with a higher number of smaller properties being listed. Despite the decline in prices, they are still significantly higher compared to August 2019.
The real estate market is undergoing significant changes as inventory levels rise, selling times increase, and prices begin to adjust. Buyers and sellers are navigating a market that is in transition, with shifting dynamics and varying responses across different regions. As more homes become available, it will be interesting to see how the market will continue to evolve and adapt to these changing conditions.