The US housing market is undergoing significant changes, with rising inventory levels and falling median prices, according to Realtor data. The number of homes actively for sale has surged by 27.5 per cent year-on-year, marking the 16th consecutive month of increasing listings. This shift in the market is giving buyers more options and greater negotiating power amid ongoing economic changes.
The total number of unsold homes, which includes those under contract, rising by 18.2 per cent year-over-year. This increased inventory is attributed to sellers listing their homes at greater rates than last year, with newly listed properties seeing a jump of 4.2 per cent. Despite the growth in the number of listings, the median price of homes on the market has decreased by 0.8 per cent to $412,000.
This reduction occurs alongside more small homes being listed this year, which has contributed to lower average list prices. Instead, when accounting for size, the median list price per square foot has still grown, increasing by 1.2 per cent year-over-year, signalling underlying home value growth. Homes on the market, on average, are spending 66 days waiting for buyers—five days longer than last year—suggesting buyers have gained more time to make decisions.
Price adjustments are also on the rise, as 16.8 per cent of sellers made price cuts this February, up from 14.6 per cent the previous year. This trend of rising price reductions suggests sellers are increasingly adjusting to match the rather sluggish market conditions.
While the number of homes for sale has been climbing, it is still down 22.9 per cent compared to historically typical levels observed between 2017 and 2019. Therefore, even with current gains, the inventory remains somewhat constrained compared to pre-pandemic years, indicating some residual challenges for buyers and sellers alike.
Although it's evident inventory poses challenges, there is potential bright news; housing markets seem to have begun to stabilise. The report reveals all four US regions observed growth, with the West showing the most notable increase at 37.4 per cent. The South followed this regional growth at 29.9 per cent, the Midwest at 18.7 per cent, and the Northeast at 9.2 per cent. This consistent uptick points to recovery and improvement across multiple markets.
Further examining specific metropolitan areas, notable increases were found among the largest markets. For example, Denver experienced inventory growth of 64.4 per cent, followed by San Diego at 61.3 per cent and Las Vegas at 60.8 per cent. Despite these increases compared to last year, it's noteworthy to mention most metropolitan areas are still operating with lower inventory compared to pre-pandemic metrics.
Another area of interest is how much time homes spend on the market. Homes were reported to take longer to sell, which offers buyers increased leeway in negotiations. This trend of extended market time has been consistently reported over the past 44 weeks.
Some analysts predict the home-buying market may strengthen as potential buyers become more confident, especially with the spring buying season approaching. Following years of rapid price increases and tight inventories, the current data suggests it could be turning toward favouring buyers as they will have access to more choices and greater negotiating power.
