For-sale housing inventory is sitting at its highest point in years despite a pullback in new listings, and the contrasting numbers indicate long-standing affordability challenges are still impacting the market, leading real estate brokerages found.
Approximately 1.36 million homes were on sale in June, the greatest volume since late 2019, according to the latest data from Zillow. While numbers are still below pre-pandemic inventory averages, Zillow expects them to hit that mark by the end of the year if current trends hold.
The rise in inventory appears to come as a result of sluggish demand rather than a rush of properties being listed. New listings dropped off 10.9% month over month, Zillow said. While the slowdown can be attributed in part to normal seasonal patterns,
Higher for-sale volume may turn into opportunity for some buyers, but the length of time existing homes have sat on the market reveals affordability woes are still holding back the purchase market. Competition for home sales was lower than any June since at least 2018, Zillow found.
"The shift to a 'neutral' market is significant, but it shouldn't be mistaken for a universally cool or easy market for buyers," said Zillow senior economist Kara Ng in a press release. "While negotiating power is more balanced, the affordability crisis remains a high barrier to entry, especially for first-time buyers. Until we see a more meaningful improvement in purchasing power, this newfound balance will primarily benefit more well-off buyers."
Prices hit a median of $367,369 in June, according to Zillow's Home Value Index, while 30-year
Similarly, Redfin also found new listings fall month over month by a seasonally adjusted 3.2% in June down to its lowest mark since October 2023. While overall supply levels stayed relatively flat with only an 0.3% dropoff, housing inventory is still close to a five-year high, Redfin's data showed.
Some home buyers take advantage of a shifting market
Although consumer hesitancy is driving much of the inventory growth, Redfin also saw a significant spike in sales canceled by buyers after reaching an agreement. Approximately 57,000 buyer contracts fell through, or 14.9% of all sales transactions in June, the largest share for the month since at least 2017.
"The balance of power in the housing market has shifted toward buyers," noted Redfin senior economist Asad Khan.
"Prospective sellers are feeling discouraged by this new reality. Some are reacting by staying put or renting their homes out instead of selling — especially if they're at risk of taking a haircut," he added.
The change in sentiment is manifesting into softening home prices. Only 30.9% of homes sold in June went above list price, the smallest share for the month in five years, Redfin said. The brokerage sees negative annual growth for home values by the end of this year.
Meanwhile, Zillow data showed original asking prices slashed in 26.6% of sales in June, close to the all-time high of 27% it saw in September 2022. Cuts occurred most frequently in Denver, with a 38% share. The Mile High City was followed by Raleigh and Dallas at 36% each, while Phoenix and Nashville rounded out the top five at 35%.
