In Realtor.com’s latest monthly housing report, the total number of homes for sale in May marked seven months of growth, meaning it is slowly returning to normal — an “incredible trend,” economists say.
“What stands out to me the most is the fact that inventory is increasing significantly,” says Ralph McLaughlin, senior economist at Realtor.com. “There are 35.2% more homes on the market than this time last year, an incredible trend towards normality.”
As is typical during the warmer months of the housing market, the national median list price continued to rise seasonally by 0.3% to $442,500 in May, compared with $430,000 in April. (The median list price for May last year was $441,000.)
“While the housing market is still in seller territory, it is expected to shift in a buyer-friendly direction as mortgage rates resume their decline over the next year and the number of homes for sale increases,” said Realtor.com economic data manager Sabrina Speianu.
According to Realtor.com, moderately stable home prices are due to a growing number of affordable homes hitting the market.
“Lower-priced home inventory is increasing faster than other segments,” McLaughlin says. “There are 46.6% more homes on the market in the $200,000 to $350,000 range, something buyers with limited inventory and price points will surely appreciate.”
In addition to the list price, buyers and sellers may want to examine the average list price per square foot, which increased 52.7% in May compared to May 2019.
“It’s important to pay attention to the price-per-square-foot metric because the change in that metric is a stronger measure of how much more a home is worth over time than looking at changes in the median list price,” McLaughlin says.
According to the report, there’s more good news for sellers who bought before the Covid-19 pandemic: namely, the typical price of a home listed in May grew a whopping 37.5% compared to May 2019.
High mortgage rates have affected housing
Realtor.com notes that while listing levels are generally increasing, high mortgage rates have kept some sellers on the sidelines.
In May, 6.2% more new homes were sold than in the same month last year. But that’s almost half the levels of new listings in April, which recorded a growth rate of 12.2%.
“Sellers, who are often buyers, reacted to rising mortgage rates with some caution,” Speianu says. “Growth in newly listed homes slowed, although newly listed homes still remained above the prior year.”
And if mortgage rates fall later as anticipated, more sellers are likely to jump into the market, the report notes.
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