Despite continued struggles to fulfill unprecedented buyer demand for homes, a new report from realtor.com® showed signs that the market can keep pace due to the growth of new listings and falling prices, which indicate increased competition in a seller’s market.
432,000 new listings hit the market in August—an increase of 18,000 or 5.1% compared to the same period in 2020—and the number of listing price drops have begun to approach their pre-pandemic levels, according to the report. Entry-level homes, defined as those with smaller square footage, grew by 6.4%, while listings for homes in the 3,000-6,000-square-foot range declined 4.6%.
“This month, new sellers added more affordable entry-level homes to the market compared to last year, while others began adjusting listing prices to better compete with an uptick in inventory,” said realtor.com® Chief Economist Danielle Hale in a statement. “It’s still a strong seller’s market, with homes selling quickly at record-high prices. But now a home priced well and in good condition may see two or three bids compared to 10 last year.”
The price for entry-level homes, however, grew significantly over last year, jumping 17.6% and outpacing price increases for larger homes.
“For sellers not seeing as many offers, it may be worth revisiting pricing strategies as buyers continue searching for homes that fit their budgets,” said Hale.
The takeaway:
Inventory remains a problem despite these developments, down over 25% over the same time last year as homes continue to sell swiftly and for a premium. The typical U.S. home spent 39 days on the market in August, the report found—17 days faster than the same period last year, but two days slower than June of 2021. Prices were 8.6% higher year-over-year, slightly below last month’s record of $380,000.
Supply is still short 223,000 active listings but there are more signs of improvement there as well, with six metro areas seeing inventory actually surpass 2020 levels.
Regionally speaking:
The Midwest saw the steepest increase in new home listings year-over-year at 12.5%, followed by the South at 6.1%.
Ohio placed two cities in the top five for listing growth, with Columbus seeing a 25.6% increase and Cleveland coming in at 21.6%.
Louisville (22.8%), Baltimore (20.2%) and New Orleans (19.9%) rounded out the top metros for listing growth.
For price increases, the West saw the highest growth at 9.3% followed by the South at 7.4%. Cities with the biggest price increases were heavily concentrated in these two regions, with the red-hot market in Austin, Texas, leaping 36% followed by Las Vegas, Nevada, at 22.9%.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.