Buyers had more choices last month as inventory supplies grew at “breakneck speed,” according to a new Realtor.com report.
For the sixth month in a row, inventory of homes for sale rose at a record pace in February, up 67.8% from last year, a sign the housing market is continuing to rebalance, according to Realtor.com’s Monthly Housing Trends Report. Despite inventory increases, home prices continue to grow up 7.8% from 2021 — a good sign for sellers entering a market Realtor.com says doesn’t particularly favor buyers or sellers.
“The number of homes for sale on the market is up significantly from a year ago, even though fewer homeowners have listed their home for sale in recent months. High home prices and mortgage rates continue to cut into buyer interest and homes are taking more than three weeks longer to sell than last year,” said Danielle Hale, chief economist for Realtor.com®. “With a smaller pool of buyers today and more competition from other homes on the market, homesellers will likely need to adjust their price expectations in the market this spring.”
February home supply growth rose at a record annual pace, driven by low buyer interest due to higher mortgage costs, according to the report. But despite that increase in supply, existing home sales and demand slowed last month as fewer homes were available than they were a few years ago.
While February’s active listings were up 67.8% from 2022, they were down nearly 50% (47.4%) from pre-pandemic levels. Newly listed homes and homes under contract fell last month, down 15.9% and 24.7% respectively.
In the country’s 50 largest metros, the number of homes for sale increased 86% from last year — 49 of them had active inventory gains. Only Hartford, Connecticut, had inventory decline year over year, falling 8.8%.
Clare Trapasso, Realtor.com’s executive news editor noted that for many, shopping for a new home begins or picks up as we head into the warmer months.
“Potential buyers looking to take advantage of more homes to choose from and a less competitive pace also have more negotiating power than they did a year ago,” she said. “So if a home has been on the market a while without receiving any offers, they may want the seller to contribute to their closing costs, make expensive repairs, or even buy down their mortgage rate.”
Home price growth is leveling off as more sellers are dropping prices.
February’s median listing price was $415,000, up from $406,000 in January, and 7.8% higher than a year prior. Thirteen percent of active listings had price reductions, up from 5.4% last year.
Homes are also taking longer to sell. In February they took three weeks longer than they did a year ago with a typical home spending 67 days on market. While that’s 23 days longer than a year ago, it’s 20 days faster than the pre-pandemic average.