Despite the push for inventory growth, active listings slowed for the fourth month in a row in July, according to a new report from Realtor.com. While buyers had fewer for-sale options, with active inventory 49.2% below typical pre-pandemic July levels, the market tipped slightly in their favor as the median list price declined year over year for the second month in a row.
Realtor.com’s Monthly Housing Trends Report for July found that the median listing price dropped by 0.9% to $440,000, up 37.7% from 2019. Active listings were down 6.4%, and down 47.8% from 2019. New listings fell 20.8%, and down 27.1% from 2019. Median days on the market rose by 11 days to 45, down 12 days from 2019. The share of active listings with price reductions dropped 3.6 percentage points to 15.5%, down 2.2 percentage points from 2019.
Key highlights:
- Active inventory decreased in 38 out of 50 of the largest metros compared to last year. Only the Southern region saw inventory grow, up +2.8% year over year, led by New Orleans (+39.6%), San Antonio (+34.5%) and Memphis (+33.2%).
- In July, none of the 50 largest metro areas saw new listings increase over the previous year. Declines were greatest in Phoenix (-44.3%) Seattle (-38.4%) and San Jose (-35.3%).
- Higher mortgage rates compared to July of last year increased the monthly cost of financing 80% of the typical home by roughly $346 (+17.5%) compared to a year ago.
- Nationally, the share of homes with price reductions decreased from 19.1% in July 2022 to 15.5% this year. The share of price reductions remains below typical levels seen in 2017 to 2019.
- Across the 50 largest metros, in July the typical home spent 39 days on the market, 8 days more than the previous July. Time on market increased the most in Miami (+24 days), Austin (+20 days), San Antonio (+19 days), and Raleigh (+19 days).
- In Q2 2023, 60.3% of all Realtor.com listing views from the Top 100 metros went to homes located outside the metro areas where shoppers live, up 0.7 percentage points from Q1 2023 and 4.1 percentage points year over year.
- Regionally, Western home shoppers (67.7%) were most likely to look for out-of-market homes in Q2, but Northeastern shoppers (59.9%) are catching up. Northeastern shoppers saw the highest growth in Q2, when the share of out-of-market shopping was 5.5 percentage points higher than the prior year.
- In all four regions, more than half of online shopping traffic went to homes outside of the shoppers’ metro areas. Only the Western region had this level of outside shopping interest three years ago.
- Chicago has been the top out-of-state destination for home shoppers based in San Francisco for the past four quarters, likely because of its relatively affordable housing, similar tech/industry structure and easy access to transportation. Similarly, Dallas serves as the metro pair for Chicago for shoppers seeking tech jobs, easy air transportation and warmer weather.
- Tampa is a metro pair for multiple metros in New York and Ohio, including Akron, Cincinnati and Cleveland in Ohio and Buffalo, Rochester and Syracuse in New York. Las Vegas is Honolulu’s metro pair, Phoenix is Portland metro pair, and Miami is New York City’s metro pair.
Major takeaway:
“While a second monthly year-over-year decline in list prices bodes well for potential buyers, the ongoing lack of homes available for sale continues to prop up home prices and will keep declines relatively modest for the remainder of the year,” said Realtor.com Chief Economist Danielle Hale. “Interest rate hikes continue to further cut into buyers’ purchasing power, although they appear to have adapted to the higher mortgage rate environment faster than sellers, many of whom are still on the sidelines, locked in to lower interest rates and unwilling to cash in their home’s equity to purchase another. That’s putting a damper on home sales, which will likely post their smallest annual tally this year in over a decade.”
Realtor.com economist Jiayi Xu added, “Housing affordability isn’t likely to improve anytime soon, so it’s not surprising to see that Americans are on the move and increasingly searching for homes in more affordable areas of the country where they can stretch their housing dollars further. Sellers are much more likely to see interest from out-of-towners than in years past, and from where that interest is coming might be the most surprising.”
For the full report, visit https://www.realtor.com/research/july-2023-data/.
