Real Estate Inventories Compared to Pre-Covid Levels
Recently falling mortgage rates have encouraged an increase in homeowners to list their homes for sale. But the increase in inventory is still far below the inventory of homes during pre-pandemic levels.
The number of homes for sale on the market rose for the second straight month in December as a severe housing shortage finally begins to ease.
A new report from Realtor.com shows that the total number of homes for sale, including homes that were under contract but not yet sold, rose by 4.9% in December compared with the same time a year ago.
It marked the second month since June 2023 that would-be homebuyers were able to see a larger number of unsold homes than compared with the same time last year.
"Across the U.S. we’re seeing improvements in inventory levels, especially in the South," said Danielle Hale, Realtor.com chief economist.
A big part of the increase was due to a 9.1% jump in new listings, or properties that made their market debut in December, which posted an annual increase for the second time after 17 months of declines.
Listings usually fall in December from the prior month. But the 5.5% drop was lower than the norm of 6.8%.
While the news is a net positive, the inventory availability was extremely uneven.
Inventory in the South surged by 7.7% in December when compared with the year-ago period. However, it was a different story elsewhere in the country. Inventory climbed just 0.2% in the Midwest, fell 8% in the Northeast, and plunged 14.8% in the West.
Inventory is not only the result of homeowners ready to sell, but also the result of new construction. In short: Home builders will build where there is demand. And as everyone knows there is a mass movement underway during the last several years of Americans moving to the American south. Florida, Texas, Tennessee, North and South Carolina are among the top ten destinations of Americans on the move.
Nevertheless, the jump in home listings is still well below pre-pandemic levels.
And despite the jump in the number of homes for sale last month, inventory remains muted when compared with several years ago. The available home supply is still down a stunning 34.3% from the typical amount before the Covid 19 pandemic began in early 2020, according to the report from Realtor.com.
"While the uptick in December inventory levels is encouraging, it is important to note that two-thirds of outstanding mortgages in the U.S. have a rate under 4% and more than 90% have a rate less than 6%," Hale said. "We are optimistic that inventory levels are moving in a positive direction, but the number of homes on the market is still low relative to pre-pandemic levels."
As for inventories, there is still a bit of a road ahead to reach pre-pandemic levels. As Hale puts it, “It’s definitely a step in the right direction for the housing market, but we’ll need to see this repeated not just in November and December, but into January and February in order to really turn around the inventory situation in the housing market.”