Housing market sees increased listings amid falling mortgage rates

Falling mortgage rates and a recent rate cut by the Federal Reserve have sparked renewed activity in the housing market this fall. According to a report from Realtor.com, September saw an 11.6% increase in newly listed homes compared to the previous year.

Realtor.com economist Ralph McLaughlin highlighted that this marks "a three-year high on the heels of falling mortgage rates and the Fed’s 50 bps rate cut." The easing of high rates has led to more movement in the market, as both buyers and sellers gain confidence with anticipated further cuts.

McLaughlin noted, “We find that the lock-in effect is easing,” adding that sidelined buyers are re-entering as their purchasing power increases. His research revealed a 34% rise in homes for sale on an average September day compared to last year, indicating a potential shift towards a buyer's market.

The surge in new listings is most prominent in expensive markets where savings from lower mortgage rates are significant. Seattle (+41.8%), Washington, DC (+30.4%), and San Jose, CA (+27.1%) recorded notable growth in new home listings over the past year.

“In fact, we find a strong correlation between the median-priced home in a market and the growth in newly listed homes compared to last year,” McLaughlin stated. Buyers in higher-priced markets like Seattle save more on monthly mortgages than those in less expensive areas.

Regionally, all areas saw an increase in listings with the South leading at 42%, followed by the West at 36.5%, Midwest at 22.3%, and Northeast at 14.8%. Florida cities such as Tampa, Miami, and Jacksonville experienced substantial listing increases of 74%, 67.9%, and 61.9% respectively.

Despite these gains, inventory levels remain below pre-pandemic figures by 23.2%. "While inventory this September certainly continues to improve," McLaughlin remarked.

In terms of pricing trends, September's median home price fell nearly $5,000 from August to $425,000 while per-square-foot prices rose by 2.3%. This reflects a significant rise since September 2019 when per-square-foot prices increased by over half.

Price changes varied regionally; they rose slightly in the Northeast (2.8%) and Midwest (0.6%), but decreased marginally in the West (0.2%) and South (2.3%). Among major metros, Rochester NY (+13%), Milwaukee (+11.4%), and Cleveland (+9.3%) saw significant price hikes whereas Miami (-12.4%), Cincinnati (-9.5%), and San Francisco (-8.9) faced declines.

Furthermore, about one-fifth of all listings featured price reductions—a slight increase from last year—though overall market stability persists according to McLaughlin: “While market speed moved at the slowest rate for a September since 2019.”

Homes are also spending longer on sale; averaging two extra days from August’s figure of 53 days up to September’s average of 55 days—the slowest pace seen during any recent Septembers within five years—but still quicker than pre-pandemic times when averages were around sixty-two days between years spanning back till then.