Inventory is on the rise again, but agents are still struggling to find new listings. Insights from the Intel Index survey, shared by hundreds of brokers and agents, reveal what strategies are working in markets that are still tight.
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Picture the housing market as a grocery store.
In this analogy, the shelves have been bare for the past few years, resembling a bleak Soviet supermarket. However, things are starting to change.
“What we’re seeing is that the supermarket shelves are slowly getting restocked,” said Realtor.com Senior Economist Ralph McLaughlin. “They’re not fully stocked like before the pandemic, but progress is being made.”
The housing inventory situation in the U.S. is improving, which is positive news. However, the market remains complex, and 2024 has not shown significant growth so far.
To gain a better understanding of the current situation, Intel engaged with economists and surveyed numerous agents and brokerage leaders in late June as part of the Inman Intel Index survey.
The key takeaway is somewhat bittersweet: while inventory has increased compared to a year ago, it still lags behind pre-pandemic levels, and demand remains subdued.
Improvement in Inventory
Experts interviewed for this article agreed that overall inventory is showing signs of improvement.
- Redfin Chief Economist Daryl Fairweather noted that “inventory is at its highest level for this time of year in at least the last four years,” with around three months of inventory available.
- McLaughlin highlighted the South as the region with the most significant inventory improvement, attributing it to robust homebuilding. He mentioned that supermarkets in the South are almost back to pre-pandemic levels in terms of stocked inventory and pricing.
This positive trend in inventory improvement is not limited to the South.
- Altos Research founder and President Mike Simonsen stated that unsold home inventory is increasing across the country, with every state reporting higher inventory levels compared to the previous year.
Data confirms this trend, showing a steady rise in active listings.
Credit: Realtor.com data, visualized by Intel
- Realtor.com data indicates a 37 percent year-over-year increase in active home listings in June, with 6 percent more homes listed compared to May. The housing trends report for June from the search portals indicates that the market stabilized as mortgage rates remained steady.
- Realtor.com data also reveals that the upward trend in active listings has been ongoing for a longer period, with 839,992 active listings in June, marking a 70 percent increase from the same month in 2021.
- Data from the National Association of Realtors shows 3.7 months of inventory in the U.S. housing market as of May, up from a low of about 1.6 months at the beginning of 2022.
Challenges Despite Increased Inventory
Although the rise in inventory seems promising, the real estate market is facing challenges that are impacting revenue.
Simply looking at inventory levels or active listings may create the impression that the housing market is experiencing a resurgence after years of stagnation. However, the reality is more complex, and the reason for the increase in active listings is crucial.
- Fairweather explained that while new listings have increased compared to 2023, the rise is only 10 percent. Moreover, new listings are still lower than in 2021 and 2022. This implies that inventory is growing because homes are staying on the market longer and selling below the list price.
Credit: Realtor.com data, visualized by Intel
This indicates that the increase in inventory is more a result of weak demand than a surge in new supply.
- Simonsen noted that higher mortgage rates have dampened demand, leading to an inventory build-up. Other factors contributing to subdued demand include fewer job changes and relocations, as well as a decrease in new job creation. “While there aren’t many layoffs, there also aren’t many new hires,” he explained.
- Optimal Blue data reveals that average rates for a 30-year fixed-rate mortgage peaked last fall at just under 8 percent but have since dropped to the high 6 percent range. These figures explain the small increase in new listings but also the weak demand. With loans still costly for many consumers, homes remain on the market longer, leading to rising inventory levels.
- Despite the increase in inventory, Realtor.com data shows that active listings in June were still 23 percent lower than the average June figures from 2017-2019, just before the pandemic.
Historically, housing supply remains tight.
On the other hand, a mere 22 percent anticipate a decrease in their pipeline. In essence, real estate agents are optimistic about the future, with many believing it will be just as good, if not better, than the present.
For more information, feel free to reach out to Jim Dalrymple II via email.