The housing refresh continues as new data suggests the housing market reached a turning point in its supply struggle in May. Active listings inventory returned, recording the first year-over-year increase since June 2019, according to Realtor.com’s Monthly Real Estate Trends Report released today. Meanwhile, the national median home price soared to a record high of $447,000, and buyers snapped up listings a week faster than a year ago.
“Among the key factors fueling the return of inventory are new sellers, who are listing homes at a rate not seen since 2019, as well as moderating demand, with pending listings declining year over year. ‘other in May,” said Danielle Hale, chief economist for Realtor.com.
She explained: “While this real estate update is welcome news in a still undersupplied market, it has yet to dampen house price growth, in part due to the increase in the number of newly listed and larger homes and because typical seller prospects are quite high. , probably shaped by recent experiences owners who have sold. Importantly, given that 72% of sellers this year are also considering buying a home, sellers’ expectations will likely begin to mirror buyers’ needs. In a first sign, the rate of sellers making price cuts accelerated in May.
Inventory increases for the first time in three years as new sellers enter the market
The stock of active listings increased year-over-year for the first time since June 2019, with the return driven by two key trends. First, new listings hit the highest monthly level in nearly three years as the growing number of sellers could be more confident in pursuing enrollment plans than last spring when the Covid vaccines had just rolled out. Second, rising housing costs are driving a moderation in buyer demand. This is reflected in the larger year-over-year declines in pending listings in May – those at various stages of the sales process that are yet to be sold – compared to Aprila sign of a slowdown in the turnover rate of homes for sale.
- Nationally, active listings rose 8% year over year in May, but remained 48.5% below normal levels in May 2020 at the start of the pandemic.
- Compared to last month’s year-over-year changes, national data for May showed a significant improvement in the trend for new listings (+6.3% vs. 1.3%) and a larger decline in pending registrations (-12.6% vs. -8.7%).
- Among May new listings, the share of smaller homes (up to 1,750 square feet) declined year-over-year (to 45.7% from 47.3%), while those larger than 1,750 square feet increased from 52.7% to 54.3%.
- On average across the 50 largest U.S. markets, active inventory grew double digits (+14.9%) from May 2021 levels, with the largest increases in the West (+33.6%) and the South (+18.3%), led by Austin, Texas (+85.8%), Phoenix (+67.1%) and Sacramento, California. (+54.6%). Active listings were down year over year in only 8 markets.
- Thirty markets posted year-over-year gains in newly listed homes, with the biggest increases in southern metro areas: Raleigh, North Carolina (+27.9%), Nashville (+22.8%) and Las Vegas (+20.7%).
Home asking prices hit new high as sellers’ expectations remain high
The increase in options of houses for sale in May, combined with weaker demand from buyers, would generally lead to lower house prices, but the data shows that is not yet the case. In fact, the annual growth rate of the median listing price in the United States has accelerated from last month’s pace, with the median listing price approaching $450,000 after just crossed the $400,000 threshold in March.
From asking prices per square foot to pending listing prices, housing trends in May suggest a few factors are potentially behind the continued spike in home prices. These include a growing share of newly listed and larger square footage homes and some sellers who are not yet adapting to changing supply and demand dynamics, including l buyers’ interest in cheaper homes.
- The median U.S. listing price hit an all-time high of $447,000 in May, rising at a faster pace year-over-year (+17.6%) than last month (+14 .2%). Per square foot, asking prices for active listings are up 16.2% from May 2021 levels.
- A potential sign of slowing buyer demand nationally, the median listing price for a typical pending listing slowed in May from April to 17.2% at an annual rate of 16, 2%. Additionally, the national share of listings that were priced down increased from 7% in April to 10.5% in May, but the rate remains well below typical pre-Covid levels.
- In-force listing prices in the nation’s largest metropolises rose an average of 13% year-over-year in May, with the largest increases in Miami (+45.9%), Nashville ( +32.5%) and Orlando, Florida. (+32.4%).
- In May, median listing prices fell year over year in only six major markets, namely: Pittsburgh (-10.5%), Rochester, New York (-9.7%), Cincinnati (-9.6%), Cleveland (-2.3%), Detroit (-1.8%) and Buffalo, New York (-1.2%).