The housing market is leveling out, with smaller, more affordable homes being listed and sellers pricing more competitively as 423,000 new homes go up for sale, according to Realtor.com’s August Housing Market Trends Report.
The data show the number of homes actively for sale was up 4.3% nationally in August over the past year, and up 5.1% specifically in large metro areas.
“A deceleration in the decline of inventory means the market is heading in an encouraging direction, but active inventory still remains historically low,” the report said.
Freddie Mac estimates the US is short 3.8 million single-family homes. That estimate represents a 52% rise in the nation’s home shortage compared with 2018.
“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,” said Realtor.com Chief Economist Danielle Hale.
“It’s still a strong seller’s market, with homes selling quickly at record-high prices,” she said. “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.”
Some industry observers think the uptick in inventory and cooling of prices means the market is headed back to normal, but not everyone agrees.
“The real estate market in the first half of 2021 bore the surging demand from a millennial reshuffling,” said Greg Toschi, CEO of Poplar Homes. “Millions of older millennials are creating families and were planning to buy a home in 2022 to 2025.”
Toschi says some of the recent surge in prices is seasonal, but he believes the overall demand pressure will still remain high. “Inventory numbers are also climbing,” he said. “But prices probably won’t go down much as normal.”