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When assessing home price momentum, ResiClub believes it’s important to monitor active listings and months of supply. If active listings start to rapidly increase or get very high as homes remain on the market for longer periods, it may indicate pricing weakness. Conversely, a rapid decline in active listings could suggest a market that is heating up.
In August 2024, there were 26% fewer U.S. homes for sale as compared to August 2019. Given there is not an excessive amount of unsold inventory on the national market, it makes sense that spiked mortgage rates and strained affordability, so far, hasn’t coincided in more regional price corrections.
That said, national active inventory for sale is on the rise (up 36% between August 2023 and August 2024), suggesting that many regional housing markets have softened as buyers aren’t purchasing homes as quickly as they are being listed. Simply put, buyers have gained some leverage in most resale markets over the past year, with some markets even becoming buyer’s markets.
The metro map above—which is sized by total active listing count—removes some of the noise from the county map and shows that the biggest inventory jumps over the past year are concentrated across the Sun Belt.
Many of those Sun Belt markets have a greater concentration of new construction. Homebuilders, who have greater margins to make affordability adjustments, could be attracting buyers who might otherwise look in the resale market. This cooling, with the help of strained affordability, is helping to increase days on market, months of supply, and active listing counts.
How far does inventory need to rise before buyers actually gain the edge?
According to ResiClub’s research, over the past two years housing markets where active inventory has climbed back above pre-pandemic levels are the places where buyers have gained the edge, and in many cases it’s where home prices have actually started to fall.
Most of the Midwest, Northeast, and Southern California remain below pre-pandemic inventory levels. In contrast, many parts of the Gulf Coast—including Tampa, Florida, and New Orleans—and the Mountain West have ticked back above pre-pandemic inventory levels.
Some of the metro areas where homebuyers have the edge right now and active inventory is above pre-pandemic levels include the aforementioned Tampa and New Orleans, plus Austin; Memphis; Nashville; Dallas; Denver; San Antonio, Texas; and Jacksonville, Florida.
This post originally appeared at fastcompany.com
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