Increasing Inventory: A Byproduct of Demand, or More Sellers?

Inventory is opening up—but is it because homeowners are jumping to sell?

The answer is unlikely, according to the latest market report by Zillow, which found that while there were improved inventory levels in March overall, there has been a downtrend in fresh listings on the market for four months in a row. Compared to last March, there were 1.2 percent more homes on the market this year, according to Zillow, but also 6.1 percent fewer fresh listings in the same window.

The catalyst is demand, and less of it—not more sellers, says Skylar Olsen, director of Economic Research at Zillow.

“There is a narrative that inventory is growing, which favors buyers—but the how and why is important,” Olsen says. “There may be more homes available for sale over the course of the month, but that’s because more leftovers from previous months are sticking around.”

In February, homes were on the market for four days more than the prior year, according to Zillow—the biggest lag since 2011. Moreover, in March, 33 of the 35 largest markets had a bump in listings with price reductions this year. With days-on-market slowing, not speeding up, and more prices slashed, the competition is cooling.

“Fewer homeowners are putting their homes on the market and buyer demand is falling back,” says Olsen. “Buyers won’t have as much competition this shopping season and can take more time finding the perfect match, if it’s out there.”