Inventory is on the rise again, but agents are still struggling to find new listings. Insights from the Intel Index survey, shared by hundreds of brokers and agents, reveal what strategies are working in the current tight market.
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Picture the housing market as a grocery store. For the past few years, the selections have been limited, resembling a poorly stocked Soviet supermarket. However, a change has been detected recently.
“What we’re observing is that the supermarket shelves are beginning to fill up again,” stated Realtor.com Senior Economist Ralph McLaughlin. “They’re not fully stocked like they were pre-pandemic, but progress is being made.”
While the housing inventory situation in the U.S. is showing signs of improvement, the market remains complex. Despite the increase in inventory, the market in 2024 has not seen significant growth.
To gain a better understanding of the current situation, Intel conducted interviews with economists and surveyed numerous agents and brokerage leaders in late June through the Inman Intel Index survey.
The consensus from these conversations is somewhat bittersweet: while there is more inventory compared to a year ago, it still falls short of pre-pandemic levels, and demand remains subdued.
As a result, agents are relying heavily on their existing networks to navigate a challenging market.
Improving Inventory
Experts interviewed for this article agree that inventory is indeed improving.
- Redfin Chief Economist Daryl Fairweather noted that “inventory is currently at its highest level for this time of year in at least the last four years,” with about three months’ worth of inventory available.
- McLaughlin highlighted the significant improvement in inventory in the South, where homebuilding has been robust. “Supermarkets in the South are almost fully stocked compared to pre-pandemic levels, with inventory priced fairly,” he explained.
The trend of increasing inventory is not confined to the South alone.
- According to Altos Research founder and President Mike Simonsen, “the available inventory of unsold homes is rising across the country.” Every state has seen an increase in inventory compared to the previous year.
Data reflects this trend, with active listings steadily climbing.
Credit: Realtor.com data, visualized by Intel
- Realtor.com data indicates a 37 percent year-over-year increase in active homes for sale in June. Additionally, home sellers listed 6 percent more homes in June compared to May. The housing trends report for June from search portals concludes that the “market stabilized as mortgage rates also stabilized in June.”
- Data from Realtor.com reveals that the number of active listings surged to 839,992 in June, marking a 70 percent increase compared to the same month in 2021.
- According to the National Association of Realtors, as of May, there was a supply of 3.7 months in the U.S. housing market, up from a low of about 1.6 months at the start of 2022.
Increased Inventory, But Where’s the Demand?
Merely looking at the number of months of inventory or active listings may suggest that the U.S. housing market has made a strong comeback after years of stagnation. The shelves in the proverbial supermarket seem to be restocked and ready for business.
However, those in the real estate industry know it’s not that straightforward. The increase in active listings is not solely due to a surge in new supply. Rather, it reflects weak demand.
- Fairweather pointed out that while new listings have increased compared to 2023, the rise is only about 10 percent. New listings are still lower than in 2021 and 2022. Essentially, inventory is growing not because of a flood of new listings but because existing listings are staying on the market longer and selling below the listing price,” Fairweather explained.
Credit: Realtor.com data, visualized by Intel
This indicates that the increase in inventory is more a result of weak demand than a surge in new supply.
- Simonsen explained, “As mortgage rates increased, demand slowed down, allowing inventory to accumulate.” Other factors contributing to this subdued demand include fewer people changing jobs and relocating, as well as a decrease in new job opportunities. “While there aren’t many layoffs, there aren’t many new hires either,” he added.
- Optimal Blue data reveals that average rates on a 30-year fixed-rate mortgage peaked just under 8 percent last fall but have since dropped to the high 6 percent range. These figures explain the modest increase in new listings and the sluggish demand. High loan rates deter many consumers, leading to homes remaining on the market longer and inventory rising.
- Despite the rise in inventory, Realtor.com data shows that active listings in June were still approximately 23 percent lower than the average June figures from 2017-2019, just prior to the pandemic. Housing supply continues to be tight compared to historical standards, making it challenging for buyers to find homes they like and afford. This situation contrasts with the high demand and low supply experienced during the pandemic years. Agents and brokers are actively addressing these challenges by focusing on building relationships with repeat clients. The majority of listings are coming from existing contacts, indicating that industry professionals see these connections as valuable resources in the current market. Despite the ongoing struggles, there is optimism for the future, with many agents believing that their listing pipelines will either remain stable or improve in the coming year. This positive outlook suggests that the real estate market may see improvements in the near future. sentence: Please let me know if you have any questions.
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