According to a new report from Realtor.com [1], following two months of year-over-year declines, home prices in August rose 0.7% as the number of homes on the market decreased for the second month in a row, which is now down 7.9% year-over-year.
According to Realtor.com’s Monthly Housing Trends Report, [1] active inventory remained at a low of 47.9% below averages recorded before the pandemic between 2017-2019—although an unseasonable increase of 3.5% in newly listed homes from July to August of this year provides more options for home shoppers as the autumn buying season quickly approaches.
"While the uptick in new listings is good news for home shoppers, inventory remains persistently low, even with record-high [2] mortgage rates putting a damper on demand," said Danielle Hale [3], Chief Economist for Realtor.com. "The inventory crunch continues to put upward pressure on home prices, amplifying affordability concerns and shutting some potential buyers out of the market. However, we anticipate mortgage rates will gradually ease through the end of the year [4] and, despite this month's bump in home prices, we'll be unlikely to see a new price peak this year."
So, what does this mean for homebuyers, sellers, and the housing market? According to the report, sellers were less active in August compared to last year, the increase in newly listed homes for sale from July to August creates a nice boost for shoppers heading into fall, which is typically the best time to buy a home. Homeowners who have been on the fence about selling will likely find eager buyers looking for fresh listings.
"As fall buying activity heats up, the newly available homes for sale aren't likely to remain on the market long, so sellers and hopeful homebuyers will need to be prepared to move quickly," said Realtor.com Executive News Editor Clare Trapasso [5]. "Home shoppers can save searches on Realtor.com [6] to receive real-time alerts, receive mortgage pre-approvals, and pore over their budgets to determine what they can realistically afford with today's higher mortgage rates."
What this boils down to is affordability remains the chief concern in the current market. While sales of new homes are on the rise, new construction activity isn’t keeping up to offset the robust inventory shortages to ease prices, which are up nearly 38% from August 2019 levels. Additionally, elevated mortgage rates have raised the monthly financing cost of the average home by about $417, up 21.7% from August 2022. This greatly exceeds both wage growth (4.4%) and inflation (3.2%).
August’s numbers revealed that home listing prices rose slightly year-over-year, ending a two-month streak of year-over-year price declines—Despite listing prices being slightly higher than in August of last year, the median list price is not likely to break last year’s peak of $449,000 which occurred un June 2022 as we head into the slower fall buying season.
Other high level findings from Realtor.com include:
- The U.S. median list price fell to $435,000 in August, down from $440,000 in July, but is up slightly (+0.7%) from August of last year.
- While all regions saw listing prices in larger metros increase on average, Northeastern metros had the highest growth rate in active listing prices, with an average increase of 9.7% over the past year.
- Among the 50 largest U.S. metros, only seven saw their median list price decline compared with this time last year, down from 12 last month. The greatest year-over-year price declines were seen in Raleigh (-4.6%) and Las Vegas (-2.8%). Larger southern metros saw the lowest listing price growth rate among the regions (3.2%).
- Nationally, the share of homes with price reductions decreased from 19.3% in August of last year to 16.2% this year and remains below typical levels seen in 2017 to 2019.
- Among the 50 largest metros, the largest increases in the percentage of homes with price reductions compared to last year were in San Antonio (adding 3.9 percentage points), Memphis (+3.7), and Oklahoma City (+1.9).
- Nationally, active inventory shrank -7.9% year over year in August compared to last year. On average, active inventory in August was -47.8% below typical 2017–2019 levels.
- Pending listings, or homes under contract, declined by 11.5% compared to the same time last year, which is slightly smaller than July's 12.6% decline and much improved from December's peak decline (-36.9% year over year).
- Newly listed homes were 7.5% below last year's levels, but this rate of decline is much improved from a decline of 20.8% in July. Newly listed homes increased by 3.5% from July to August.
- In all regions, the inventory of homes actively for sale was down 30%–60% from pre-pandemic levels. Inventory declined least in the South, by 1.5% compared to the same time last year, followed by a decline of 13.5% in the Midwest, 19.3% in the Northeast, and 31.5% in the West.
- In August, only Milwaukee (+6.8%) and Jacksonville (+4.0%) saw new listings increase over the same time last year. Declines in new listings were greatest in Nashville (-27.2%) Cincinnati (-25.0%) and Seattle (-24.7%).
- In August, the typical home spent 46 days on the market, five days longer than this time last year, but 13 fewer days than they did on average from August 2017–2019.
- Time on market increased in August compared to last year in 35 of the 50 largest metro areas. Larger metros in the South saw the greatest increase (+6 days), followed by the Northeast (+2 days), Midwest (+1 day) and West (+0 days).
- At the market level, time on market increased the most in Austin and New Orleans (+15 days), as well as in Miami (+13 days).
Click here [7] to see the report in its entirety.