Number of homes for sale triples since 2022 providing edge for buyers

After years of battling tight inventory and rising prices, homebuyers are beginning to see favorable changes. In 2022, with interest rates around a historic low of 3%, fewer than 350,000 houses were on the market in the U.S. By 2024, this number has nearly tripled to approximately 910,000 homes for sale.

Several factors contribute to this growth. There has been a surge in new construction. The National Association of Realtors® predicts single-family housing starts will increase by 4.7% this year and another 4.2% next year.

Overall, the number of homes for sale is up by 35.8% compared to last year—reaching the highest levels since May 2020, according to Realtor.com's August housing market report. With more homes available, buyers have more choices and room for negotiation.

Homes are moving slower than they have in the past five years. The average home now spends 53 days on the market—seven days longer than a year ago. Sellers accustomed to a fast-moving market have had to be patient and make concessions.

“The share of listings with price cuts reached the highest for an August in over five years, increasing by 3.1 percentage points compared with last year, to 19.3%,” says Realtor.com senior economist Ralph McLaughlin in his recent analysis.

However, while overall home prices are down by 1.3% year over year (with the median price at $429,990 in August), the cost per square foot has risen by 2.3%. This means that although prices are lower, homes may be smaller.

Kate Terrigno, an agent with Corcoran in Charlotte, NC., notes that increased inventory provides buyers with more negotiating power and fewer bidding wars: “There are fewer competing bids for each property,” she says. “This can result in better terms or price reductions.”

Mortgage rates now closer to 6% combined with a growing supply of homes provide buyers with more leverage than they’ve had in years.

Active inventory surged across all four regions compared with last year: listings rose by 45.6% in the South; climbed by 34.5% in the West; increased by 23.1% in the Midwest; and went up by 13.9% in the Northeast.

Compared with pre-pandemic Augusts from 2017 to 2019, inventory was closest to normalcy in the South (down just 11.7%) while it fell by larger margins elsewhere—the West saw a drop of 15.9%, while both Midwest and Northeast lagged significantly behind their pre-pandemic levels at gaps of 44.7% and 54.6%, respectively.

Inventory spiked dramatically across major metropolitan areas such as Tampa, FL (90%), San Diego, CA (80%), and Orlando, FL (76%).

Mike Golab from Dash House Buyers suggests that increased new construction can simplify buying processes due to reduced competition: “With more homes becoming available... you won’t have to worry about as much buyer competition when looking for a home.”

Marco Smith from Maryland and Delaware Group notes that new-construction availability can aid negotiations: “A move-in ready home can be much easier to negotiate.” Kate Terrigno adds that builders might offer incentives like closing costs or upgrades: “As new-construction inventory increases... leading towards a stable favorable market.”

The influx also affects renters positively as Nathan Miller from Rentec Direct explains: "When high quantities enter rental markets... we often see rent concessions."

Miller recounts his experience renting out an eight-unit development quickly through reduced rents: "Imagine how this situation plays out when hundreds or thousands become available nationwide."

Overall increased availability benefits both potential homeowners & renters alike fostering improved conditions across real estate markets nationwide.

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