Title: Real Estate Market Update: Rising Inventory and Impact on Prices
The real estate market is experiencing significant changes as inventory levels continue to rise, affecting both buyers and sellers. According to a recent report from Realtor.com, active listings in August were up 36% compared to the same month last year, marking the 10th consecutive month of annual growth. Despite this increase, inventory remains 26% lower than pre-pandemic levels in August 2019.
As more homes hit the market, sellers are adjusting their strategies. There were fewer new listings in August compared to the previous year, leading to a growing supply of homes. This shift is causing homes to linger on the market longer, prompting price cuts and moderation in asking prices.
Danielle Hale, chief economist at Realtor.com, noted, "The widely anticipated Fed rate cut has already ushered in lower mortgage rates, but it seems that some buyers and sellers are waiting for additional declines." This cautious approach is reflected in the decrease in applications for loans to buy a home, despite lower mortgage rates.
Certain cities are experiencing significant gains in inventory, with Tampa, Florida seeing a staggering 90% increase in active listings compared to the previous year. Other notable cities with substantial inventory growth include San Diego, Miami, Seattle, and Denver.
Regionally, the South led the way with a 46% increase in active listings, followed by the West (35.7%), Midwest (23.8%), and Northeast (15.1%). As homes take longer to sell, the typical days on market in August increased by seven days compared to the previous year.
Ralph McLaughlin, senior economist at Realtor.com, explained, "We have found that the market slows by about one day for every 5.5 percentage point increase in the year-over-year number of active listings." This increase in inventory is translating into lower prices, with the share of homes with price reductions rising to 19% in August.
While prices are down 1.3% year over year, they are still significantly higher than in August 2019. This change is partly due to the mix of homes being listed, with more smaller homes entering the market. As the real estate landscape continues to evolve, buyers and sellers must adapt to these shifting dynamics to make informed decisions in today’s market.
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