After more than two years of a historically lean housing market, listings are starting to rise − and swiftly.
Active inventory nationally jumped 33.5% in October from the same time last year, according to Realtor.com. That puts supply at the highest level in two years.
It’s not that sellers are rushing into the market; newly listed homes dropped 16% from a year ago, and pending listings are down 30%. But supply is growing because the homes that are on the market aren’t selling as fast as they did just six months ago.
The average number of days it takes to sell a home is now 51, up by six days compared with a year ago.
“As the rapid runup in rates reshapes housing market dynamics this fall, both buyers and sellers are taking a step back to recalibrate their plans,” said Danielle Hale, chief economist for Realtor.com.
Mortgage rates have climbed so high and so fast that home shoppers are rushing to the sidelines. Already, affordability was rough with home prices up more than 40% since the start of the Covid-19 pandemic. But with rates now more than twice what they were in January, at just over 7%, potential buyers are looking at a monthly payment that is nearly $1000 higher than it would have been at the start of the year.
Housing availability varies by city, depending on demand and affordability.
In Phoenix, inventory jumped a striking 174% in October. The city saw a mad rush of buyers over the past two years as employees who could suddenly work from anywhere moved out of pricey markets in California. Now, sales in the city are down more than 30% from a year ago, according to Redfin.
Inventory is also up 167% in Raleigh, North Carolina and up 145% in Nashville, Tennessee, markets that also saw an influx of buyers during the pandemic. Inventory is still down in Chicago, Milwaukee and Hartford, Connecticut, but those markets did not see the same surge in demand over the last two years.
The slowdown in demand for homes has caused sellers to cut their prices. A full 20% of listings now on Realtor.com have had a price cut − about twice the share as a year ago.
Still, home prices are not exactly falling yet. The price gains from a year ago are, however, shrinking at the fastest pace on record, according to several surveys.
And with prices still high, more buyers appear to be widening their searches. Just over 60% of listings on Realtor.com in the third quarter of this year came from shoppers outside of a listing’s area. That’s up from 57% in the second quarter and 52% in the same quarter of 2021.
“For buyers with the flexibility, relocating to a lower-priced market could help offset higher mortgage costs. There’s also a takeaway for sellers in these areas – on a well-priced home, you could still see strong interest from these out-of-towners,” added Hale.