The U.S. housing market, long plagued by a severe inventory shortage, is finally showing signs of relief. For years, the lack of available homes has driven prices skyward, exacerbating the home affordability crisis. However, new data suggests a subtle shift. According to Realtor.com’s July housing report, the number of homes actively for sale nationwide grew by a notable 36.6% year-over-year last month. While this is an encouraging signal, it is tempered by the reality that inventory levels remain 28.6% lower than in July 2019, pre-pandemic. Nonetheless, this uptick in available homes might just be the first step toward a more balanced market.
Despite this increase in inventory, the affordability crisis is far from over. Home prices hit yet another record high in May, according to the S&P CoreLogic Case-Shiller index. However, there is a glimmer of hope for potential buyers: the share of listings with price cuts has reached 18.9%, the highest rate since October. As noted by Realtor.com’s senior economist Ralph McLaughlin, this rise in price reductions coinciding with higher inventory levels could signal a market correction that many have been awaiting.
Seattle, Washington, has emerged as a frontrunner in this inventory surge. The city saw the highest year-over-year increase in home listings of any U.S. city last month, with a staggering 37.3% rise. Currently, there are 2,867 homes for sale in Seattle, with a median list price of $818,000. This increase in available homes is a welcome change for prospective buyers who have been grappling with skyrocketing prices and fierce competition.
San Jose, California, also reported a significant jump in home inventory, with a 30.8% increase in July compared to the same month last year. The city currently has 1,355 homes for sale, boasting a median price of $1.29 million. While still astronomically high, the surge in listings might offer some respite to buyers, indicating that sellers are perhaps re-evaluating their price expectations in light of the changing market dynamics.
Not to be left behind, Columbus, Ohio, ranked third in inventory growth. The city experienced a 17.4% increase in home listings last month on an annualized basis. With 3,059 homes on the market at a median list price of $309,000, Columbus is also contributing to the broader trend of increasing home availability. This could potentially ease some of the pressure on buyers who have been struggling to find affordable housing options.
While these developments are promising, the road to a fully balanced housing market is still long. The increase in inventory and the rise in price cuts suggest that the market might be beginning to correct itself. However, with inventory levels still significantly lower than pre-pandemic levels, potential buyers and sellers alike should keep a close eye on market trends to navigate this evolving landscape.