BAM's Key Details
- Inventory of active listings increased 33.5% year-over-year, according to Realtor.com®.
- The increase in housing inventory is due to hesitation from buyers, as pendings decreased -30% year-over-year.
- Newly listed homes decreased by 15.9% year-over-year, showing less seller activity.
It’s no secret that housing inventory has been an issue, making buyers take drastic measures to secure a deal over the past couple of years.
But with the recent market slowdown, more options are available. Active listings increased 33.5% year-over-year in October, according to the Realtor.com® Monthly Housing Trends Report released this week.
The data also shows that fewer shoppers could afford to take advantage of the rise in inventory, as high mortgage rates and listing prices have led to increased days on market.
Inventory Climbs—But Not Because of New Listings
Inventory grew at a record annual pace in October, surpassing 2020 levels for the first time. This is largely due to homes sitting on the market longer, as the number of new sellers declined for the fifth month and pending listings continued to drop.
The fall typically brings a decrease in the number of new listings that hit the market—so the seasonal change is nothing new.
But the drop in new listings this year is significant. This reflects seller hesitation to sell in today’s market because buyer power has taken a drastic hit.
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. Home shoppers are looking at a monthly mortgage payment that is roughly $1,000 higher than at this time last year, and incomes are rising but not by that much. Combined with asking prices that are still climbing at a double-digit yearly pace, the average American has taken a huge hit to their homebuying power.
Here’s a breakdown of where the increase in listings is coming from:
- Nationally, active inventory grew 33.5% year-over-year, reaching the highest level in 24 months.
- Newly listed homes decreased -15.9% year-over-year, so there aren’t as many sellers willing to put their homes on the market.
- Pending listings declined -30% year-over-year as buyers stepped back due to affordability issues.
Less Buyer Competition
The number of home sales is declining along with affordability. For buyers still in the market, this means less competition and more properties lasting on the market.
The decrease in competition hasn’t taken a huge toll on home prices yet, with a median national listing price in October at $425,000, just $2,000 less than in September. In addition, the annual national listing price growth remained double-digit at 13.3% in October, though it decelerated slightly from the 13.9% annual increase seen in September.
However, a closer look at the 50 largest U.S. metros showed an annual listing price growth in single digits at a 9.2% increase year-over-year. Over 20 of those markets are still seeing double-digit listing prices, led by Milwaukee (34.5%), Miami (25.1%), and Kansas City (21.4%).
As home prices have remained high and interest rates have continued to rise, buyers are more reluctant to enter the market. Because of this, home price reductions increased to 20.9% in October, and the typical home spent 51 days on the market in October. This is six more days than last year but 20 days faster than the pace in 2017-2019.
Educate Clients on Options Available in Today’s Market
The majority of consumers are backing off due to fear—especially if they are reading today’s headlines.
Many are not aware of the options available to them in today’s market. Whether that’s a mortgage rate buy-down program, the ability to negotiate more, or, in more affordable markets, a continued influx of out-of-state buyers.
Take time daily to review market data locally and nationally, and be willing to spend time having conversations about the market and options in real estate. Because every market has opportunities—as long as you have the information needed.