U.S. Housing Market Sees Biggest Increase in Listings in Four Years

In positive news for U.S. homebuyers seeking more options, the number of homes for sale nationwide has reached its highest level in over four years, according to a recent report from Realtor.com. The report revealed that the housing inventory grew 35.8% year-over-year in August, marking the 10th consecutive month of growth and the highest level of available homes since May 2020. However, new listings declined slightly, with 0.9% fewer homes hitting the market compared to the same period last year.

Changes in Prices and Selling Conditions

With more homes on the market, buyers are benefiting from more favorable pricing trends. "Price cuts are more common, asking prices are moderating, and homes are taking longer to sell," said Danielle Hale, chief economist at Realtor.com. Despite these improvements, both buyers and sellers are still cautious, waiting for even better market conditions before making moves.

Impact of Mortgage Rates on Buyer and Seller Activity

The highly anticipated Federal Reserve rate cut has already led to lower mortgage rates, but both buyers and sellers seem to be holding out for further declines. As a result, competition among home shoppers this fall is likely to be lower than what is expected in spring 2025, when more buyers are anticipated to enter the market amid potentially better mortgage rates, according to Hale.

As of August 29, the average 30-year mortgage rate stood at 6.35%, its lowest point in over a year, according to data from Freddie Mac.

Shifts in Home Prices and Sizes

The median listing price for homes in August was $429,990, representing a 1.3% decline compared to last year. However, the median price per square foot rose by 2.3%, suggesting an increase in the availability of smaller, more affordable homes in the market.

Longer Selling Times and More Price Reductions

The percentage of homes with price reductions increased to 19.2% in August, up 3% from the same month last year. Additionally, homes spent a median of 53 days on the market, making it the slowest August in five years.

According to Ralph McLaughlin, senior economist at Realtor.com, "The market slows by about one day for every 5.5 percentage point increase in the year-over-year number of active listings." This trend means that, in certain markets, homes may remain on the market for 15 to 20 more days compared to last year, given the rapid growth in inventory.

The growing inventory and moderating prices indicate that the housing market is shifting toward a more balanced environment, providing buyers with more choices and better negotiation power. However, both buyers and sellers remain watchful of mortgage rate fluctuations and are prepared to adapt as conditions evolve.

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