Home Prices Remain Flat, but Buyers Have More Inventory To Choose From

Homebuyers are seeing more choices when it comes to shopping around for a new house. The number of active homes on the market increased 14% year over year, according to the Realtor.com® Weekly Housing Trends report.

This marks the 104th straight week of annual gains in inventory. For perspective, there were about 1.1 million homes for sale last week.

Active inventory is growing significantly faster than new listings, and that's an indication that more homes are sitting on the market for longer and that homeowners aren’t eager to sell, according to Realtor.com economists.

This comes as mortgage rates dropped to their lowest level in more than a year last week to 6.17%.

The report found that after several months of steady gains, fewer homeowners put their properties on the market in early November, signaling that the post-summer inventory buildup is leveling off.

With prices holding steady and homes spending slightly longer on the market, buyers will find more breathing room even as the flow of new listings has slowed.

Unfortunately, for homebuyers who didn't jump on the opportunity to lock in a low rate, they're out of luck this week, as mortgage rates rose to 6.22%.

"Though mortgage rates have fallen in recent months, they are still significantly higher than they were a few years ago when many people bought homes," says Joel Berner, senior economist at Realtor.com.

"This leaves many would-be buyers feeling locked in to their lower rate in their current home and reluctant to move. In addition, the softening of the labor market has many others feeling like they can't count on their paycheck going forward, which makes a major purchase even more daunting. Others are seeing currently weak price growth as a sign that the home they purchase may not appreciate at the rate that they hoped."

The report reveals that despite the welcome progress on rates in the prior weeks, buyer sentiment remains flat.

The Home Purchase Sentiment Index, which measures U.S. consumers’ views on the prospects of buying a home, remained unchanged. Meaningful wage growth and greater financial stability will be needed to grow confidence, but with the government shutdown in its second month, concerns about job security continue to increase, especially after the recent rounds of layoffs at several major companies.

By the numbers

Last week, new listings were down 3.2% compared to the same time a year ago. New listings are a measure of sellers putting their homes up for sale.

With mortgage rates closer to 6%, many homeowners may be encouraged to try putting their homes up for sale with the hopes that buyers will jump on the lower rates.

Overall, active inventory grew 14% year over year. The amount of active inventory is growing faster than new listings, which is an indication that more homes are sitting on the market longer.

"The last November there was this much inventory on the market was in 2019. This growing inventory puts downward pressure on listing prices, which have been basically stagnant for the past three years, and upward pressure on time on market, which has returned to near pre-pandemic levels," says Berner.

And homes are staying longer on the market. The median time a home is listed on the market is 63 days. This is about as long as it took to sell a home during the COVID-19 pandemic. So, as homes continue to sit longer on the market, more sellers are cutting their asking prices in hopes of closing a deal before the end of the year.

The median list price dipped slightly compared to the same week a year ago. Adjusting for home size, the price per square foot fell 0.7% year over year, dropping for the ninth consecutive week. The national median list price is $424,200.

A majority of homes on the market are older, established homes.

"The average home for sale was built in 1985. Last year at this time, it was 1984, so the ages of homes for sale has not changed much in the past year. Compared to this time of year in 2019, when the average home was built in 1981, it appears that homes for sale have gotten slightly older," Berner explains.