Supply of homes for sale up 68% as buyers remain sidelined
Realtor.com's monthly market report shows six straight months of increasing inventory.
Key points:
- The increase in inventory is largely the result of fewer buyers in the market rather than more new construction or new seller listings.
- Among the nation’s 50 largest metro areas, 49 had more active listings in February compared to last year.
- In response to low buyer interest, twice as many sellers are cutting prices compared to a year ago.
U.S. housing inventory last month was up nearly 68% over 2022, pointing to a more competitive marketplace as homes took longer to sell, Realtor.com reported Thursday.
For the sixth month in a row, the supply of homes for sale increased, setting a record for the annual pace of growth, according to Realtor.com's Monthly Housing Market Trends Report.
The increased inventory is largely the result of fewer buyers shopping for homes, rather than more new construction or more sellers listing their homes for sale.
"High home prices and mortgage rates continue to cut into buyer interest and homes are taking more than three weeks longer to sell than last year," said Danielle Hale, chief economist at Realtor.com.
"With a smaller pool of buyers today and more competition from other homes on the market, homesellers will likely need to adjust their price expectations in the market this spring," she added.
Sellers seem to be taking note. "As a result of these cost pressures, the slowdown in the demand for homes means more than twice as many sellers cut their asking price in February compared to last year," Hale said.
Active listings up in nearly all metros, but fewer newly listed homes
Among the nation's 50 largest metro areas, 49 reported more active listings in February compared to last year, with Austin, Raleigh and Nashville leading the pack with increases near or above 300%.
Still, overall inventory was low relative to pre-pandemic levels. Only three metros — Las Vegas, Austin and San Antonio — had higher levels of inventory in February compared to the three years leading up to the pandemic, Realtor.com said.
Hartford, Conn., was the only market to have a year-over-year decline in active listings.
Just six metro areas had a higher number of newly listed homes in February over last year, including Raleigh, with a 14.8% increase; Dallas at 10.3%; and San Antonio at 10.2%.
The largest yearly declines in newly listed homes were in western markets, led by San Jose, down 43.3%; San Francisco, off 39.4%; and Seattle, with a 36.8% drop.
Hale emphasized that with so much uncertainty in the market, neither buyers nor sellers have the advantage. "Both will likely have to make compromises to make a deal happen," Hale said.
For sellers, that means pricing a home appropriately for the market and neighborhood. Buyers need to make "the best offer they can" within their budget, she said.
The report also looked at key housing numbers year-over-year and pre-pandemic:
The median listing price in February 2023 was $415,000, up nearly 8% annually and up 40% over February 2019, but down month-over-month.
While the supply of active listings rose at a record annual pace — up 67.8% over February 2022 — inventory is still almost half of pre-pandemic levels, the report said.
New listings were down 15.9% from February 2022 and off by nearly 24% from February 2019.
13% of active listings had price reductions, up from 5.4% a year ago. The southern region of the U.S. had the largest increase in the share of listings with price reductions, at more than 10%.
Homes in February spent 56 days on the market, up from 37 a year ago. The West and South saw the biggest jumps in days on market, and the West was the only region to see an increase relative to pre-pandemic times.