A for sale sign is seen outside a home listed for sale on August 16, 2024 in Los Angeles, California. U.S. real estate industry rules governing agent commissions will 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 remains low by historical standards, but is rising rapidly.
According to a new report from Realtor.com, active listings nationwide in August were up 36% compared to the same month last year. This was the 10th straight month of year-over-year growth. However, supply is still 26% lower than it was in August 2019, before the pandemic.
As inventory grows, sellers are pulling back. There were fewer new listings in August (-1%) than a year earlier. The growth in supply is due to homes staying on the market longer.
“In August, as the number of homes for sale continued to rise, price reductions became more common, asking prices moderated, and homes took longer to sell,” Realtor.com chief economist Danielle Hale wrote in a press release. “The widely anticipated interest rate cut by the Federal Reserve has led to lower mortgage rates, but some buyers and sellers appear to be waiting for further declines.”
You can see that in weekly mortgage data. Home loan applications are down about 4% from a year ago, according to the Mortgage Bankers Association. That’s even though the average 30-year fixed 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, Fla., stocks are up more than 90% from a year ago. San Diego stocks are up 80%, Miami 72%, Seattle 69% and Denver 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.
The increased supply is causing homes to stay on the market longer. The typical home spent 53 days on the market in August, seven more than a year ago and the slowest August pace in five years.
“We found that the market slows by about one day for every 5.5 percentage point increase in active listings year over year,” said Ralph McLaughlin, senior economist at Realtor.com. “Given the rapid inventory growth we’re seeing now, that could mean changes in some markets of up to 15 to 20 additional days on the market compared to last year.”
Finally, increased supply and longer selling times translate into lower prices. The share of homes experiencing price declines in August rose to 19%, up 3 percentage points from the previous August. The median listing price fell 1.3% year-over-year. Part of that is due to the mix of homes on the market, with more smaller homes being listed. Prices are still 36% higher than in August 2019.
