Housing inventory is now under 2022 levels as of the end of June. During the same week in 2022, active listings went up 30,940, but they increased by only 5,848 this year. Mortgage rates also increased around the same time after the jobs numbers were better than expected. Despite these higher rates, there was still a third consecutive week of positive buying application data.
Since May 15, inventory in the U.S. has been negative year-over-year. Additionally, new listing data has been moving negative since June 2022.
The grim inventory picture contrasts with some recent good news for buyers, including that home prices fell in June for the first time in six years. Even so, at the same time, with the number of homes for sale shrinking, the good news isn’t quite as exciting.
This converging of factors explains one of the big reasons home prices haven’t gone down much, even with everything else going on economically.
June 2023 was the first year-over-year decline in home asking prices since 2017.
However, newly listed homes have been declining for 51 straight weeks. Even with a reported increase in seller confidence, new listings were recently down 29% from the year before.
Part of this stems from sellers who don’t want to leave their current homes and their locked-in mortgage rates. An estimated 1 in 7 homeowners who say they aren’t going to jump into the housing market right now highlighted mortgage rates as their reason. This means we’re unlikely to see any big spikes in inventory anytime soon.
The rate on a 30-year fixed mortgage recently edged back up over 7% after a few weeks of hovering at around 6.7%. These rates keep homeowners from listing their houses, driving up prices with limited options available to buyers.
Move-up buyers are essentially nonexistent in this market.
Pending home sales, one of the key indicators of the health of a housing market, went down 2.7% in May versus the month before, largely because buyers couldn’t find enough properties to make a deal. Each listing got an average of three offers.
For buyers hoping the summer would bring a better selection of homes, that’s not what’s happening. Typically by the middle of June, there would be anywhere from 10-20% more homes on the market versus the holiday period, but fewer this year.
The housing market isn’t just shrinking. It’s also slowing. Homes for the week that ended June 24 have been staying on the market for 13 more days, but homes are still selling faster than the average seen in June from 2017 to 2019. June 2023 data shows homes staying on the market for around 43 days, ten days less than the time frame from 2017 to 2019.
Analysts expect the overall inventory in 2023 will decline, leaving the most viable path for many buyers being new construction.
New home sales are increasing in many countries, even as a tight inventory restricts existing sales. The problem with that is that there aren’t that many new homes coming onto the market that will be affordable for an entry-level buyer.
The positive side of this data is that homeowners are getting more equity. Still, for people who would otherwise be first-time homebuyers, it remains a fairly bleak picture as far as the inventory of existing properties.
