The housing market is currently experiencing a shift in dynamics, with the supply of homes for sale increasing at a rapid pace. According to a recent report from Realtor.com, active listings in August saw a 36% year-over-year increase, marking the 10th consecutive month of growth. However, despite this positive trend, inventory levels are still 26% lower than they were in August 2019, before the onset of the pandemic. As inventory continues to grow, sellers are starting to pull back, resulting in fewer new listings compared to the previous year.
One of the key reasons for the surge in supply is the fact that homes are staying on the market for longer periods. With more options available to buyers, sellers are finding it necessary to make price cuts, moderate asking prices, and be more patient in selling their homes. This trend is also reflected in the data on mortgage applications, which show a 4% decline in loan requests for home purchases compared to the same period last year, despite significantly lower mortgage rates.
While most cities are experiencing an uptick in inventory levels, some regions are witnessing particularly significant gains. Tampa, Florida, for example, has seen its inventory increase by more than 90% year-over-year, followed by San Diego (80%), Miami (72%), Seattle (69%), and Denver (67%). Regionally, active listings have risen by 46% in the South, 35.7% in the West, 23.8% in the Midwest, and 15.1% in the Northeast.
The rise in supply and the corresponding longer selling times are beginning to have an impact on prices. The median list price in August was down 1.3% year over year, and the share of homes with price reductions increased to 19%. This decline in prices can also be attributed to the changing mix of homes available on the market, with smaller homes becoming more prevalent. Despite the recent decrease, prices are still significantly higher than they were in August 2019, with a 36% year-over-year increase.
The current trends in the housing market indicate a shifting landscape, with rising inventory levels leading to longer selling times and lower prices. Both buyers and sellers are adjusting to these changing conditions, and it remains to be seen how the market will continue to evolve in the coming months.
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