Housing market changes: When the dynamics change rapidly in favor of home buyers

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When evaluating home price momentum, it’s important to monitor active listings and offer months. If active listings begin to increase rapidly, or rise significantly, as homes stay on the market longer, it may indicate potential price weakness in the future. Conversely, a rapid decline in active listings may suggest a growing market.

In October 2024, national active inventory increased 29% over October 2023. Although that is still 21% less US homes for sale compared to October 2019, the increase suggests that, nationally, the market is softening as buyers are absent. buying homes faster than ever before.

Simply put, buyers have gained some momentum in many resale markets over the past year, with some markets even being buyers’ markets.

That said, the inventory picture varies greatly across the country right now. Let’s dive deeper into the state and metro data:

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In the last 12 months, active listings have reached almost everywhere; however, the largest inventory jump over the past year is concentrated across the Sun Belt.

Many of those Sun Belt markets have a large concentration of new construction. Homebuilders, who have large margins to make affordable changes such as mortgage-backed purchases, may attract potential buyers to the resale market. This cooling, with the help of difficult affordability due to the pandemic housing price/mortgage shock, is helping to increase days on market, months of supply, and active listing statistics.

Some of those Sun Belt markets, especially around the Gulf, have also been hit by the home insurance shock and the pandemic/job-induced out-migration. In Florida, there is also a shock happening in its condo market.

While active home listings are increasing year over year in many regional housing markets, many markets are still below pre-pandemic levels. One could argue that this foreclosure is a much-needed change given how unhealthy and tight the housing market was during the housing boom.

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Most of the Midwest, Northeast, and Southern California remain below pre-pandemic levels. In contrast, many parts of the Gulf Coast, including Tampa and New Orleans, and the Mountain West have bounced back above pre-pandemic productivity levels.

The “5 years” column in the chart above is the most telling. Among the 50 largest markets, Austin home buyers gained the most power/strength. At the same time, merchants in Hartford, Connecticut, maintained the greatest strength/power.

In general, housing markets where inventory (ie, active listings) have returned to pre-pandemic levels have experienced weak home price growth (or an outright decline) over the past 24 months. On the other hand, housing markets where inventory remains well below pre-pandemic levels have, in general, experienced strong home price growth over the past 24 months.