August housing data shows early signs of sellers beginning to compete for buyers, according to the Realtor.com Monthly Housing Report released today. As inventory and newly-listed homes continued to improve in August, the rate of sellers making price adjustments has begun to approach more normal levels.
U.S. housing inventory declined 25.8% year-over-year in August, an improvement over last month (-33.5%). New listings were up 4.3% from last year as new sellers continued to list entry-level homes in more affordable price ranges. Additionally, the share of sellers who made listing price adjustments grew 0.7% year-over-year to 17.3% of active inventory – the highest share in 21 months and closer to typical 2016-2019 levels.
“Low mortgage rates have motivated homebuyers to endure this year’s challenging market and now some buyers are starting to see their persistence pay off. This month, new sellers added more affordable entry-level homes to the market compared to last year, while others began adjusting listing prices to better compete with an uptick in inventory,” said Realtor.com® Chief Economist Danielle Hale. “It’s still a strong seller’s market, with homes selling quickly at record-high prices. But now a home priced well and in good condition may see two or three bids compared to 10 last year. For sellers not seeing as many offers, it may be worth revisiting pricing strategies as buyers continue searching for homes that fit their budgets.”
Inventory continues to improve as new sellers list more entry-level homes
While August marked the fourth consecutive month of newly-listed homes boosting national inventory from the steepest 2021 declines seen in April (-53.0%), the U.S. housing supply is still short 223,000 active listings compared with last year. Inventory was improving at a faster pace across the 50 largest U.S. markets in August, down an average 20.7% year-over-year, and six metros like Washington, D.C. (+17.1%) saw inventory surpass 2020 levels.
Additionally, 432,000 newly-listed homes hit the national housing market in August, an increase of 18,000 over last year. Continuing last month’s trend, more new sellers added to the share of entry-level homes (+6.4%), defined as single-family homes in the 750-1,750 square foot range, whereas listings with 3,000-6,000 square feet declined 4.6% in August. Virginia Beach (+17.0%), Milwaukee (+16.7%) and Tampa (+13.7%) posted the highest yearly gains in the share of entry-level homes.
Across the 50 largest markets, new listings increased an average of 5.1% year-over-year in August. Regionally, the Midwest saw the biggest increase in newly-listed homes over last year (+12.5%), with Columbus, Ohio (+25.6%) and Cleveland, Ohio (+21.6%) taking two of the top five spots by highest new listings growth over last year. The South also saw a sizable yearly increase in new sellers in August (+6.1%), with Louisville, Ky. (+22.8%), Baltimore (+20.2%) and New Orleans (+19.9%) rounding out the top five metros with the biggest new listings gains.
Listing price growth remains high as price adjustments approach more typical levels
The U.S. median listing price increased 8.6% year-over-year to $380,000 in August, just 1.3% below last month’s record price ($385,000). Yearly price growth continued moderating month-to-month in August, down from July (+10.3%), driven in part by the inventory mix shifting to include a higher share of smaller homes at lower price points. With first-time homebuyer demand still high in August, the entry-level home price ($235,000) grew 17.6% year-over-year, faster than the 15.3% increase in 3,000-6,000 single-family home prices ($749,000). However, overall yearly price growth remained historically-high in August, with only two months during the 2017-2019 period meeting or exceeding the month’s growth rate over last year.
Over one-third (18) of the 50 largest metros posted double-digit price gains over last year in August. Among the four primary U.S. regions, the highest yearly price increases were in the West (+9.3%) and South (+7.4%). Markets in these regions also dominated the top 10 list of metros with the biggest year-over-year price growth, at five each, including: Austin (+36.0%), Las Vegas (+22.9%), Tampa (+20.0%), Riverside, Calif. (+17.6%) and Orlando (+15.4%).
Many of the metros where price growth was highest in August also saw a rise in listing price adjustments, including Austin, at a 4.1% increase in the share of price drops over last year. With Austin median home price ($544,000) up by over one-third of last year’s levels in August, 23.8% of sellers in the metro made a price reduction, potentially to help compete with higher numbers of new sellers than last year (+19.6%). Additionally, as Austin first-time buyers pursued new inventory of relatively affordable entry-level homes, entry-level home prices ($404,000) posted a significant gain of 47.9% year-over-year in August.
“With big city employers increasingly meeting talent in more affordable secondary metros in recent years, Austin has become one of the nation’s most popular next gen tech hubs and hottest housing markets. However, data shows that even as some sellers are starting to compete for home shoppers in Austin, buyers still face fierce competition for a limited number of homes. Homebuyers looking for their next home in a tight market can use features like those on Realtor.com® to set up price alerts for new listings that match their criteria, or finetune price adjustments to surface homes closer to their budgets,” said George Ratiu, Realtor.com® Manager of Economic Research.
Homes continue flying off the market; seasonal norms slowly take hold
The typical U.S. home spent 39 days on the market in August, 17 days faster than last year and 24 days faster than in the same month during a more typical year from 2017-2019, on average. However, time on market continues to moderate from the record-fast pace seen earlier in the pandemic, at two days slower in August than in June (37 days). Nashville had the fastest time on market, at a median of 18 days.
The pace of home sales was even faster across the 50 largest U.S. metros, averaging just over a month at 33 days in August, but the yearly gap is shrinking more quickly (-12 days). Although the South saw the steepest decline in time on market (-17 days), the pace of home sales moderated from July (-22 days) across the region and in many of the fastest-selling metros. In August, Miami (-34 days), Jacksonville (-26 days) and Raleigh (-24 days) saw the biggest drops in time on market compared to last year.