Housing inventory, a long-time bane of prospective homebuyers, has surged to the highest level in four years.
The number of homes actively for sale in August climbed to more than 909,000 units, representing a nearly 36% year-over-year increase, according to data from listing site Realtor.com Moreover, the supply of affordable homes, defined as those priced between $200,000 and $350,000, increased by 46%.
Housing inventory has been improving all year, a trend that will likely lead to “more balance between buyers and sellers,” Danielle Hale, Realtor.com’s chief economist, writes in the report. In fact, August marked the 10th consecutive month with an increase in supply, and there are now more active listings than at any point since May 2020.
More homes on the market, especially starter homes, is good news for would-be homebuyers. They’ll have more options to choose from when house hunting and sellers will be more likely to negotiate on concessions and home prices to make their property stand out.
What’s driving the increase the supply of homes for sale
Record-low mortgage rates during the pandemic years led to a home buying frenzy that depleted an already below-average housing supply. The ensuing competition among buyers for the few available homes caused a run-up in home prices, with some buyers paying well over the asking price just to get the sale done.
That all changed last year. Mortgage rates quickly increased while home prices remained high, producing an affordability crunch that is still felt in today’s housing market. Many buyers have opted to stay on the sidelines and wait for either interest rates or prices to come down.
The lack of affordability is now one of the reasons why housing supply may be making a comeback. One of the main reasons for the bump in inventory is that homes aren’t selling as quickly as they used to. The current number of days on the market is 53, seven days longer than a year ago. With fewer buyers looking for homes, listed homes are taking longer to sell and helping to push inventory levels higher.
Still, the timing of the latest inventory boost couldn’t be better. In the fall, there are typically fewer active buyers and less competition for available homes. Home prices tend to decrease this time of year, too. Mortgage rates have been trending lower over the past few months, which also helps improve affordability.
“As the number of homes on the market continues to climb, price cuts are more common, asking prices are moderating and homes are taking longer to sell,” Hale writes. “As the market slows seasonally, fall is one of the best times to buy a house.”
10 cities with the fastest growing housing inventory
While housing inventory is up nationwide, there are certain markets that have seen considerable growth since last year. Here are the cities with the biggest year-over-year increase in the supply of homes for sale.
- Tampa, Florida — 90%
- San Diego, California — 80.4%
- Orlando, Florida — 76.9%
- Miami, Florida — 72.2%
- Seattle, Washington — 69.3%
- Jacksonville, Florida — 68.3%
- Denver, Colorado — 66.8%
- Charlotte, North Carolina — 62.4%
- Atlanta, Georgia — 58%
- Dallas, Texas — 50.6%
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