The important thing to watch for with the new listings is when we transition from this era of very few sellers to one with a more historically normal level of sellers. There are 60,000 to 70,000 new listings each week now, when in the pre-pandemic times there would have been 80,000 sellers per week.
There is no evidence of seller supply increasing significantly. The trend has been slow incremental growth all year. There’s no sign of that trend changing.
New listings per metro
But I was curious. Are there any local markets where we can see homeowners, or investors, or builders running for the exits?
Austin has more inventory sitting on the market now than any time in the past decade. Is that inventory surging from sellers flooding the market? In fact, no. It turns out that Austin has 3% fewer new listings each week now than in 2019. A big shift in homebuyer demand drove Austin’s inventory up over the last two years, but because there still aren’t that many sellers, Austin’s inventory does not appear poised to grow much from here.
What about Tampa or Sarasota? Are sellers unloading after the hurricanes? It turns out, no, the opposite is happening. There are fewer sellers than normal, which makes sense given the devastation, but it is worth checking the data to verify. Maybe next year is the time for more sellers in Florida, but not yet.
Of the 100 biggest inventory metros around the country, 76% have fewer new listings each week now than they did in 2019. There are only a couple markets that stand out with a lot more sellers each week now — Spartanburg, South Carolina; McAllen, Texas, and maybe Huntsville, Alabama. Spartanburg has 53% more sellers now than in 2019. McAllen has 44% more, and Huntsville 29% more. All three of these are investor- and builder-heavy markets. They’re all small towns. Maybe there’s a nexus of builders, investors and slowed migration patterns in 2024 that led to that buildup?
The takeaway on the local new listings data is that most of the country is poised to have inventory decline if mortgage rates fall and stimulate demand. There are almost none with any signs of seller-led supply.
Pending home sales up
There were 60,000 single-family homes which took offers and went into contract this week across the country. That’s 9% more than last year and in fact 11% more sales contracts started than the same week in October 2022.
Overall, there are 358,000 single-family homes in contract. That’s 10% more than last year and 2% more than the same week in October 2022. This is the first time in two years that there are more homes in contract.
Again, this is not really about growth in home sales, just a tiny bit of growth. Rather, because the fourth quarters of 2022 and 2023 were so weak, the comparison is easy. We’re just very slowly adjusting to this new normal of higher mortgage rates. The current pending sales got a boost from lower mortgage rates last month, but those mortgage gains are gone now. This progress is just good enough to show some year-over-year gains and it may be fleeting. Though I expect in the fourth quarter you’ll see some headlines that say home sales are up over last year. The traditional data will start to pick up this transition.
These gains could be fleeting. Homebuyers are not afraid to walk away when money gets more expensive. Also, a lot of the big Florida markets are at a standstill and those are big enough to move the national numbers. While the recent trends are a little positive, the last few weeks have reversed any home sales momentum that might have been started.
Home prices unchanged
Home prices are largely unchanged this week. The median price of single-family homes going into contract was $389,000 again this week. Prices continue to hold up better than I expected early in the year and are about 5% greater than last year at this time.
The median price of all the homes in the U.S. right now is $439,900. That’s also unchanged from last week and is just 1% more than a year ago. Asking prices are 1% higher than a year ago, the contract prices are 5% above that same period. You can see the range for the year’s home price gains 1-5%, depending on how you measure home prices.
It’s wild how quickly the sentiment can change in a week. We thought we were at a transition point to get some home sales growth, and suddenly we had big mortgage rate spikes. We know that buyers can put the brakes on very quickly. As some point we may see sellers in some local markets getting antsy.
Mike Simonsen is the founder of Altos Research.
