Housing inventory recovery slows for ninth straight month

Housing inventory ticked up on an annual basis for the 28th consecutive month in February, but growth continued to flatten, underlining a trend losing momentum.

Active listings grew 7.9% year over year in February, but just 0.2% month over month, reaching more than 914,000 homes on the market, according to Realtor.com's monthly housing report. While inventory typically increases early in the year, annual progress has slowed for nine straight months.

New listings also rose 2.4% year over year to a total of 362,180 homes. It shot up 10% compared with January, a seasonal pattern that was dampened by winter storms that hit the East Coast, in particular, the report said.

Historically, housing supply was 16.8% below 2017-2019 levels last month, an improvement from 17.2% in January. 

"Inventory has improved for more than two years, but the momentum has faltered in recent months," said Danielle Hale, chief economist at Realtor.com, in a press release Thursday. "Supply gains have been concentrated in the South and West and skewed toward homes priced below $500,000. While the Northeast and Midwest have seen growth, they remain significantly undersupplied." 

All four major regions saw inventory gains last month, led by the West at 11.3% and followed by the Midwest (10%), South (6.9%) and Northeast (3.8%). Compared to prepandemic levels, the Northeast and Midwest remained significantly lower by 56.8% and 39.5%, respectively, while the South and West were roughly in line.

The majority of the 50 largest markets in the United States experienced inventory growth from a year ago as well. Seattle, Louisville, Kentucky, and San Jose, California, saw the largest increases at 38.5%, 27.3% and 24.8%.

Now, four cities, Denver (81.9%), San Antonio (69.4%), Seattle (66.7%), and Austin, Texas (52.2%), have at least 50% more homes for sale than before the pandemic, while seven metros remain below the 50% mark, according to the report.

New listings also rose in the Midwest (7.4%), West (5.8%), and South (2.6%), but fell 7.8% in the Northeast, largely due to the winter storms.

Pending home sales increased 4.2% on a year-over-year basis, the largest annual gain since November 2024 and likely supported by mortgage rates dipping below 6% for the first time since 2022, the report found.

"As we move toward the spring buying season with mortgage rates near 3.5-year lows, a key question is whether this thaw spurs more buyers or more sellers," Hale said.

Despite the market favoring buyers, few signs indicated they backed out of deals last month, as contract cancellations accounted for 7.2% of active listings, down slightly from a year earlier, the report found. More than 13% of homes that went under contract were cancelled last month, the highest January share in records dating back to 2017, according to Redfin.