The 2021 real estate market has seen unprecedented numbers with inventory at an all-time low and demand at an all-time high. Since the beginning of the Covid-19 pandemic, people have been flocking to other states and moving from cities to the suburbs, stirring up the market and driving home values to record highs.
Experts say that the housing market is expected to shift to a more stable market by this fall with more homes going up for sale which will help cool down the price increases, bidding wars, and record-high home sale prices. The housing market will likely still remain a seller’s market and competition will still be high, but with August showing a large increase in new inventory available, this should give buyers more options and help to stabilize the unbelievable real estate market that we have seenn for the past year and a half.
It seems as though some sellers may finally be ready to take advantage of the buyer demand with August seeing 432,000 new homes come to market, which is up 4.3% compared to a year ago. However, that is still 8.6% less for the month of August the 3 years prior.
Luckily, August saw sellers also pricing their homes more affordably, showing that the housing market is starting to normalize. Many of the new listings seem to be smaller in size compared to last year, especially in metropolitan areas and the Midwest, which is good news for first-time homebuyers or people looking to downsize. Homes with square footage of 700-1,700 increased in number while larger homes of 3,000-6,000 square feet decreased.
Even though homes are still selling 17 days faster than they were a year ago, the new amount of inventory to market is a good sign for buyers. These homes typically spent 39 days on the market compared to 56 last year, further illustrating the demand from buyers for inventory. However, time on the market increased from July to August which is a trend that is typical for the real estate market during this time period.
When it comes to some of the largest US metropolitan areas, available inventory on the market decreased by 20.7%, with southern metro areas seeing the last year over year decline at 30.2%. On the other hand, they are seeing the second-largest growth rate in new homes listed, with a 6.1% increase since last year. All major metropolitan areas have seen a decrease in days spent on the market with southern metros, such as Miami, Jacksonville, and Raleigh, seeing the largest plummet. The only metro areas to see an increase in time on the market were New York, San Diego, and Washington DC, a good sign for buyers that those markets could be cooling off.
We did see the median home list price decline slightly from July thanks to an increase in price reductions and the number of smaller and more affordable homes coming to market in August. The number of price reductions in August are more in line with 2016-2019 numbers, which is showing that sellers are having to compete more and more with other sellers than they have had to in the past year. August’s numbers show hope that home buyers will soon be able to think through their decision when it comes to buying a home and won’t be forced into tough bidding wars consistently.
While the housing market remains favorable for sellers and will likely continue to be competitive for buyers, August’s numbers show hope that the real estate market may be starting to stabilize and shows trends that are more in line with what experts are used to seeing. Although the number of days on market remains low, August saw a large uptick in homes available, especially smaller and more affordable homes, which are usually more sought-after. While competition will remain high, these trends should give hope to buyers looking to purchase a home in the near future.
