Written by Breck Hapner
Editor’s note: Welcome to the HAVEN U.S. State of the Housing Market series. Every month, we will share an update explaining details and projections related to the U.S. real estate sector to keep you informed.
The U.S. housing market showed signs of both struggle and hope in May. Price cuts hit a five-year high, and inventory reached its highest level since 2020, according to Realtor.com’s May 2024 Monthly Housing Market Trends Report, released on June 4th. In addition, a June 8th Fast Company ResiClub article reported over 30% more houses for sale compared to a year ago.
Despite this, Realtor.com’s Jiayi Xu noted that the median listing price remained flat year-over-year (YOY), and houses are taking longer to sell compared to 12 months ago, as fewer sellers are listing their homes.
In the June 13th Weekly Housing Trends View, Jiayi Xu of Realtor writes, “While homebuyers now have more inventory to choose from in a relatively slow market, elevated housing prices and high mortgage rates continue to create barriers to homeownership for many.”
To dive deeper into the current state of the U.S. housing market, visit the Realtor.com Data Library. Navigate to “Weekly Inventory” and select “View US Data” to download the spreadsheet with detailed information.
Median Listing Prices Remain Flat
For the week ending June 8th, Realtor.com data showed that median listing prices have been flat since February. Rising inventory and 7% mortgage rates have kept sales at relatively low levels nationally. This stagnant growth contrasts sharply with the post-pandemic surge in asking and sold prices.
Inventory Levels Rise
According to the Realtor.com data, national inventory levels rose by 36%, a slight increase from the previous week’s 35.5%. Except for a 36.5% increase two weeks ago, the June 8th rise is the largest YOY increase since April 2023. Inventory has been increasing for 31 consecutive weeks since mid-November 2023.
This is good news for buyers, as more homes for sale tend to slow down price gains, reflected by the current flat median listing prices. Inventory is rising due to more homes being listed and low sales.
According to the market trends report, there are 113,000 more homes for sale now compared to the start of the year, a 23% growth year-to-date (YTD). In 2023 at this time, homes for sale were down 6%. Inventory is also up 18% from January to May 2024, compared to a 9% gain during the same period in 2017–2019.
The question remains: Will inventory levels fall due to the small rise in new listings, or will home sales drop, causing inventory to rise? A similar situation occurred in the last half of 2022 when a decline in new listings and reduced buying demand caused inventory to surge.
New Listings Rise Slightly
According to the June 13th Realtor.com Trends View, new listings increased by 8%, up from the previous week’s 2.1%. Excluding the Easter holiday week, new listings have been higher than the same period last year for 33 consecutive weeks. However, the growth rate of new listings has slowed, with only single-digit increases for the past six weeks, contrasting with double-digit gains in February and March 2024.
A May 31st ResiClub article based on Freddie Mac data reported that 80% of millennials have a mortgage rate under 5%, limiting the number of people listing their homes for sale and keeping inventory well below 2019 levels.
Median Days on Market Now Longer
Realtor.com data for the past month indicates houses are taking longer to sell compared to 2023. Last week, homes took an average of two days longer to sell. From October 2023 through March 2024, houses sold faster on average compared to the previous year.
Although 30-year mortgage rates are below the 8% peak of October 2023, housing affordability remains near record lows due to high home prices and elevated rates. A June 13th Redfin report found the median home sale price is $394,000, with a 6.99% 30-year mortgage generating a monthly payment of $2,829, just $30 shy of April’s record, all contributing to slower home sales.
Increase in Price Reductions
Price reductions increased by 52.1% YOY, a five-year high, according to the data from Realtor.com. Price reductions have been higher than last year for 20 consecutive weeks, likely due to rising supply, high home prices, and mortgage rates at or exceeding 7%.
Sellers are lowering prices to move properties in a volatile market. A June 5th National Mortgage Professional report cited the Mortgage Bankers Association’s Weekly Applications Survey, showing a 5.2% decrease in mortgage purchase applications in the final week of May. On May 30th, the National Association of Realtors (NAR) reported a 7.7% decline in pending sales for existing homes in April, with all four U.S. regions showing YOY decreases. Also, according to a May 16th Zillow article, new home construction has slowed due to uncertainties related to builder confidence and future interest rates.
The Bottom Line (for Now)
The U.S. housing market is currently presenting flat asking prices, rising inventory, a significant increase in price reductions, and homes spending a longer time on the market. Combined with high home prices and mortgage rates, these factors point to a softening market. Realtor.com’s Jiayi Xu notes that “today’s homebuyers will continue to encounter relatively high borrowing costs” due to historic housing affordability issues.
In our next article, HAVEN will take a further look at the numbers: how the current U.S. housing market is reacting to prevailing economic factors influencing real estate.
