What this Week’s Data Means:
The real estate refresh has arrived, as active listings posted sizeable gains for the first time in three years. And the year-over-year gap closed rapidly, going from flat to convincingly positive territory in the span of a week. As anticipated in our April Housing Trends report, we saw the number of homes actively for sale on Realtor.com even out two weeks ago for the first time since June 2019, and last week inventory grew convincingly year over year for the first time since March 2019.
Buyers continue to face a challenging market, with for-sale homes lagging behind historical levels and asking prices still rising double-digits year-over-year, after hitting yet another record-high in April. Even so, the accelerated change in inventory trends is a welcome one, driven by the combination of more sellers and fewer buyers able to contend with rising housing costs. For those persisting in their search for relatively affordable homes, recent trends indicate that creative approaches like larger down payments or selective relocation could pay off.
- The median listing price grew by 15.9 percent over last year. The typical asking price of for-sale homes was higher than one year ago by double-digits for a 21st week. As the Fed moves to rapidly normalize monetary policy following its early May hike with plenty of guidance to prepare markets for what’s ahead, mortgage rates continue to climb. While climbing rates that cut into buyer ability to afford monthly payments are expected to ultimately dampen home price growth, we have not seen that yet, perhaps because despite slipping confidence, consumers widely believe that mortgage rate increases will continue, giving a strong reason to make a purchase sooner rather than later for those who want to buy within a relatively soon time frame.
- New listings–a measure of sellers putting homes up for sale–were up 6% above one year ago. Now that we’re in May, we’re in the heart of home selling season. Over the last few years, we have tended to see the number of new listings peak on an absolute basis this month while active inventory (newly listed homes plus those that have been on the market for a while) tends to peak in the fall. Seller confidence amid record high asking prices is driving the growth in the number of sellers this year over last which we’ve seen in 6 of the last 7 weeks.
- Active inventory moved convincingly into positive territory for the first time since 2019. While last week’s positive inventory improvement rounded to 0%, this week’s data built on that trend in a notable way, leading to the biggest year over year gain since March 2019. Our April Housing Trends Report showed that the active listings count remained 60 percent below its level right at the onset of the pandemic. This means that today’s buyers have just 2 homes to consider for every 5 homes that were available for sale just before the pandemic. In other words, homes for sale are still limited. However, more sellers combined with a slowing level of sales activity is causing a relatively rapid transition in conditions.
- Homes spent 6 days less on the market than this time last year. Homebuyers who can act quickly have an edge in a still-competitive market, and this is especially true for those who may be hoping to stand out by offering something other than a larger down payment. Our April Housing Trends Report showed that homes sat on the market for less time than ever before–a feat normally not achieved until summer. Existing homeowners, who have seen their equity grow as home prices have soared, may have more options. But first-time homebuyers, many of whom are also contending with rents continuing to grow 4-5x faster than pre-pandemic, are feeling particularly pressured in this housing market. Some shoppers are relocating to find affordability, with metro areas in the Sunbelt, particularly Texas, seeing the biggest net improvement in traffic as locals stay and outsiders aim to move in for the affordability. First-time homebuyers can check out our first-time home buyer guide to prepare for the process and navigate the market more confidently. For repeat buyers contemplating how to buy and sell at the same time, our seller’s market place and information can give you options you may not have realized you had.