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Fall can sometimes lift the housing market as people return from summer fun and decide it’s time to move. The prospect of Federal rate cuts and slowly lowering mortgage rates should set the table for some growth.
Realtor.com’s August report shows the impact of a shifting market. The report found that the median price of homes for sale in August was $429,990, down 1.3% year over year. Interestingly, the median price per square foot grew by 2.3%, meaning smaller and more affordable homes are increasing in market share.
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The bigger story is how many homes are on the market. Homes spent 53 days on the market, making this the slowest August in five years but still six days less than the average August from, 2017 to 2019. As the pace of home sales declines, inventory increases. Newly listed homes were 0.9% below last year’s levels. Inventory is still down 26.4% compared with typical 2017 to 2019 levels. One good piece of news for potential buyers is that the inventory of homes in the $200,000 to $350,000 range was up by 46.1% compared with last year.
Many potential buyers appear to be playing the waiting game. “Falling mortgage rates are likely to bring out additional home shoppers and a busier fall season than usual, but the boost in activity is unlikely to overwhelm the usual seasonal slowdown,” said Danielle Hale, Chief Economist at Realtor.com. “Shoppers who are out this fall are likely to face lower competition than is expected in spring 2025 as more shoppers anticipate better mortgage rates.”
When homes stay on the market longer, sellers have a choice. They can stay the course or cut the price, hoping for a quicker sale. The share of listings with price cuts reached its highest level in August over five years, up 3.1% to 19.3%. The West led the way in price reductions, up by 3.5%, followed closely by the Midwest at 3.3%, the South at 2.8%, and the Northeast at 2%.
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Where Inventory Is Highest
Active listings grew by 46% in the South, 35.7% in the West, 23.8% in the Midwest, and 15.1% in the Northeast. Most areas still had a lower inventory level than in pre-pandemic years. Of the 50 largest metros, 11 saw higher inventory levels in August compared with typical 2017 to 2019 levels.
Tampa, FL, is leading the way in inventory with a 90.1% increase year over year. This is followed by the San Diego metro area, where inventory is up 80.4%. The top five also include Orlando, FL, with a 76.9% increase; Miami, up 72.2%; and Seattle, with a 69.3% increase. Time on the market was up by 21 days in Tampa and 17 days in Orlando.
Some real estate watchers believe that the sharp rise in inventory means we are in a housing bubble similar to what happened before the great financial crisis. Nick Gerli, CEO of Reventure Consulting, has been chronicling what is happening on X, posting: “One major problem for the housing market is that homebuyers are not responding to lower mortgage rates.”
Potential homebuyers face an interesting problem right now. They can wait and hope that mortgage rates decrease, which will lower the size of their monthly payment as long as home prices stay where they are or drop. However, if they delay their purchases until next year, they may compete with more buyers. If that happens, inventory may deplete quickly, and we may return to the bidding wars of previous years.
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This article Realtor.com Says Housing Inventory Is Skyrocketing In These Five Cities originally appeared on Benzinga.com
