A “For Sale” sign is displayed outside a home for sale on August 16, 2024 in Los Angeles, California. US real estate industry rules governing agent commissions are set to 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)
Patrick T. Fallon | AFP | Getty Images
The supply of homes for sale is still low by historical standards, but it is increasing rapidly.
Nationwide, active listings in August were up 36% compared to the same month last year, according to a new report from Realtor.com. That was the 10th consecutive month of annual growth. However, supply is still 26% lower than in August 2019, before the pandemic.
As inventory increases, sellers are pulling back. In August, there were fewer new properties for sale (-1%) than the previous year. The increase in supply is due to the fact that homes are staying on the market longer.
“This August, as the number of homes on the market continues to increase, price cuts are more common, sales prices are moderating and homes are taking longer to sell,” Danielle Hale, chief economist at Realtor.com, wrote in a statement. “The Federal Reserve's expected rate cut has already led to lower mortgage rates, but it appears some buyers and sellers are holding out for further declines.”
This can be seen in the weekly mortgage data. Loan applications to buy a home are down about 4% compared with the same period last year, according to the Mortgage Bankers Association. This is despite the fact that the average 30-year fixed-rate mortgage rate is about 75 basis points lower now than it was then.
While supply is increasing in most cities, some are seeing huge gains. Tampa, Florida, inventory is up more than 90% compared to last year. San Diego is up 80%, Miami is up 72%, Seattle is up 69% and Denver is up 67%.
Regionally, active listings increased 46% in the South, 35.7% in the West, 23.8% in the Midwest and 15.1% in the Northeast.
Increased supply is causing homes to stay on the market longer. The typical home spent 53 days on the market in August, up seven days from a year earlier and the slowest August pace in five years.
“We've found that the market slows by about one day for every 5.5 percentage point increase in the number of active listings compared to a year ago,” said Ralph McLaughlin, senior economist at Realtor.com. “Given the rapid growth in inventory we're seeing now, that can mean changes in some markets of as many as 15 to 20 more days on the market than last year.”
Greater supply and longer selling times are finally translating into lower prices. The share of homes with price reductions rose in August to 19%, up 3 percentage points from the previous August. The average list price was down 1.3% year over year. Part of that is due to the mix of homes on the market, as more smaller homes are being put on the market. Prices are still 36% higher than in August 2019.
