Inventory in the two largest housing markets in Texas and Florida saw a decrease this week, with fewer homes for sale compared to the previous week. It seems that inventory has peaked for the season and is slowly decreasing.
There are two main reasons for this seasonal peak in unsold inventory now, as opposed to last year when inventory peaked at the end of November.
Firstly, mortgage rates are falling this year, whereas they were rising last year. This shift may lead to better dynamics for potential homebuyers. While there isn’t a sudden surge, there seems to be a slight increase in demand.
Additionally, withdrawals are on the rise, with 30,000 to 35,000 withdrawals each week compared to around 25,000 last year. This increase could be due to seller discouragement in a low-demand market, as well as homeowners having access to cheap financing, allowing them to wait until conditions improve before selling.
These trends are keeping inventory capped for the remainder of the year, especially when compared to the previous year.
As of mid-August 2024, the U.S. real estate market shows a slight increase in inventory, with 704,000 single-family homes unsold. While inventory may have peaked in Florida and Texas, the overall number of unsold homes across the country continues to be higher.
Inventory Shows Slight Increase
There are currently 704,000 single-family homes unsold on the market, representing a slight increase from the previous week. Inventory growth is slowing down as mortgage rates decline.
Despite the potential peak in inventory for Florida and Texas, the overall number of unsold homes in the country remains relatively high, indicating a rebalancing of trends.
Seller Volume Is On the Way Down
This week, new seller volume shows 65,000 new listings unsold, along with 12,000 immediate sales. While this is about 9% more than last year, it is significantly lower than usual for August. Seller volume is expected to decrease further throughout the rest of the year.
Pending Home Sales A Tick Down
There were 65,000 new single-family contracts pending this week, slightly lower than the previous week but a few percent higher than last year. While there are more sales each week compared to the previous year, there is no significant growth yet.
With 368,000 total single-family homes with sales pending, the pace remains around 4MM annually, making it challenging to measure any relative improvement in home sales.
Home Prices Inching Down
The median price of single-family homes in the U.S. is gradually decreasing and is expected to continue to do so for the rest of the year. The median price of all homes on the market is currently $449,000, slightly lower than last week but unchanged from the previous year.
As new listings’ prices hover around $400,000, sellers may resort to more aggressive discounting this fall compared to last year.
Price Reductions Decline
Approximately 39.9% of homes on the market have experienced a price cut from the original list price. As inventory decreases over the next month or two, the percentage of homes with price cuts is expected to decline as well.
While demand may decline with the season, it is not anticipated to exacerbate as in the past two years. Sellers are advised to price their properties competitively to attract buyers in the current market environment.
Overall, the real estate market is witnessing shifting trends that could impact buyers and sellers. It is crucial to stay informed and make informed decisions based on the available data.
Mike Simonsen is the founder of Altos Research.
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