Following a two-year draught in housing inventory, the housing market is showing signs of replenishment, according to data published by Realtor.com.
The week ending July 2 saw the rate of new listings increase by 8% year-over-year. The rate of active inventory rose 29% above last year’s rate.
An increase in home listings is partially being driven by higher interest rates, which are discouraging potential buyers, Danielle Hale, chief economist at Realtor.com, said in a statement.
“More homeowners are taking advantage of still-strong housing market conditions just as higher mortgage rates and home prices are causing many buyers to reconsider their moving plans,” Hale said. “As a result, the number of homes for sale is climbing rapidly.”
Purchase mortgage interest rates this week were 5.30%. A year ago at this time, 30-year fixed rate purchase rates were at 2.90%, per Freddie Mac’s PMMS Index.
Currently, there are approximately four homes on the market for every one buyer compared to three homes to a buyer in early July 2021, the report said.
Nonetheless, the market needs even more supply before the selection is on par with the pre-pandemic or even early pandemic housing market, Realtor.com’s report argues.
The amount of time homes are spending on the market is also starting to normalize.
“This is the first time in three months we did not see another new low record for time on market,” Hale said. “More homes for sale will eventually bring more balance to the housing market, cooling the ultra-fast pace of home sales we’ve seen over the last few years. We’re already getting a hint of that.”
Median listing prices, however, have continued to grow, rising by 18.3% year-over-year. The report dubbed this as a potential “data quirk” and said that it can be attributed to the Independence Day holiday, which is the busiest week for home sales.
“The Independence Day holiday is playing a role [in rising prices,”] said Hale. “We expect to see home price growth ease back lower in the weeks ahead and continue to slow.”
The median home sale listing price hit a new high of $450,000 in June, but further growth of the median listing price should not be expected this year.
The report said typically the trend for the median home listing price “tops out” around this time of year, and starts to ease in the second half of the year.
Hale said that this means shoppers still in the market are likely to see some more lower-priced options going forward.