Inventory keeps rising — will more listings mean more sales?
Supply is well above last year’s levels, but lower mortgage rates will be key to luring buyers into the market.
Key points:
- The latest data from Realtor.com estimates inventory is up 36.7% year-over-year but still far below pre-pandemic levels.
- The number of days on the market is also up slightly, meaning buyers have more choices, and more time to make a decision.
- The South and West are seeing the fastest inventory growth, but supply is building in nearly every area of the country.
Mortgage rates may be staying "higher for longer," but housing inventory will likely remain "lower for longer." Even as supply continues to build this summer, getting back to pre-pandemic levels will take some time.
In its monthly report for June, Realtor.com noted that the number of homes for sale rose for the eighth consecutive month, and supply is up 36.7% year-over-year.
Inventory is now higher than it was during the summers of 2021-2023, according to Realtor.com's data; if it increases again in July, it could surpass summer 2020 levels. The supply of relatively affordable homes — those in the $200,000 to $350,000 range — saw the highest rate of annual growth at 50%.
Buyers have more options, but may not act unless rates fall
The report also noted that the median home is spending 45 days on the market, up from 43 a year ago. While that's also below pre-pandemic levels nationwide, the West Region is now only one day below the typical levels from 2017 to 2019.
"The combination of more for-sale homes and longer time on the market is beneficial for home shoppers as they have more selection and don't need to feel as rushed in picking a place to call home," said Danielle Hale, chief economist at Realtor.com. "Whether this translates into more home sales will likely hinge on how mortgage rates impact affordability in the second half of the year."
Mike Simonsen, founder of Altos Research, is seeing similar trends with inventory. He expects inventory to continue climbing before a seasonal slowdown kicks in later this fall.
"Inventory is rising everywhere in the country. Even in places like the Northeast, which has shown the least inventory growth," Simonsen said in his weekly data update.
While inventory is expected to continue climbing for the next few months, it's still well below the levels seen 5-7 years ago. Last month, there were just under 840,000 homes for sale, according to Realtor.com; by comparison, in June 2019, active listings exceeded 1.2 million.
"Since sellers are not distressed, we don't think inventory levels will rise above 2019 levels if mortgage rates remain elevated," said Ralph McLaughlin, senior economist at Realtor.com.
Where inventory is growing the fastest
While Florida led the way earlier this year in inventory growth, other regions are catching up. Austin, San Antonio and Memphis are back to pre-pandemic inventory levels, according to the Realtor.com report. And Nashville is just 1% below the levels seen five years ago.
Regionally, the South and West are experiencing the highest growth, with inventory rising 48.7% and 36.5% respectively year-over-year. The Midwest (up 21%) is next, followed by the Northeast (11.8%).
Among metro areas, Tampa leads the way, with supply surging 92.7%, followed by Orlando (up 81.8%) and Phoenix (up 77.3%). The one major metro area that saw a decline in homes for sale was Las Vegas (down 29.5%).
So far, the inventory buildup isn't turning off sellers, McLaughlin said.
"While sellers are responding to market signals by cutting prices more frequently, data suggests they aren't calling it quits and pulling their homes off of the market. Despite these cuts, price growth is hanging around at high enough rates to keep sellers in the game," McLaughlin said.