Home Listings Surge, Indicating A Healthier Housing Market

The number of homes hitting the market for sale has increased for seven consecutive months, signaling a potential shift toward a more balanced buyers’ market amid high borrowing costs.

According to Realtor.com's monthly housing report, housing inventory grew 35.2% in May compared to the previous year, continuing a trend welcomed by homebuyers facing high mortgage rates as it provides more options and indicates a move toward market normalization.

"The biggest eye-catcher for me is the fact that inventory is rising sharply," said Realtor.com senior economist Ralph McLaughlin in the report. The report said that as mortgage rates are expected to decrease over the next year and the number of homes for sale rises, the seller’s market is projected to shift toward a more buyer-friendly environment. 

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Despite ongoing challenges posed by high mortgage rates — which have tempered the pace of home sales in some regions — there has been an expansion in the availability of more affordable housing, according to McLaughlin. "The inventory of lower-priced homes is rising faster than other segments. There are 46.6% more homes on the market in the $200,000 to $350,000 range, something inventory and price-constrained buyers will surely welcome."

That rise in housing inventory is most pronounced in the South, which notched a 47.2% increase compared to last year. The region, with markets including Austin, San Antonio, and Tampa, has seen some of the highest growth rates.

Tampa, in particular, leads with an 87.4% rise in inventory; analysts at Realtor attributed the growth to a combination of a post-pandemic recovery and sustained demand driven by relatively lower living costs and the appeal of warmer climates.

Western cities like Phoenix and Denver have also reported inventory increases, with the overall region seeing a 34.5% uptick. Phoenix saw an 80.3% increase while housing inventory in Denver increased 22% year over year. According to the report, that growth reflects a return to balance, as those markets were overheated during the pandemic. 

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Unlike its coastal counterparts, the Midwest’s growth at 20.5% year over year is less volatile, suggesting a market that offers both buyers and sellers a more predictable environment without extreme fluctuations.

While the inventory of available homes has surged, the effects on pricing and sales have yet to catch up.

The national median list price increased to $442,500 in May, up from $430,000 in April, maintaining relative stability compared to the previous year’s median of $441,000. Despite a growing inventory, the steadiness in list prices suggests that sellers are still in control — but it may not last much longer.

The percentage of homes with price reductions rose from 12.7% last May to 16.6% this year, indicating that sellers are adjusting expectations in light of market conditions, particularly in regions where inventory growth has been most pronounced.

However, the total share of inventory with price reductions remains below the levels seen in 2018.

Homes spent an average of 44 days on the market this May, up by one day from last year, signaling a slightly slower pace of sales. The increment, though minimal, marks the second consecutive month where homes have lingered longer on the market compared to the previous year.

For homebuyers, the increase in inventory, particularly in more affordable segments, provides more options and potentially better negotiating power. For sellers, particularly those in markets that have seen sharp price appreciation since before the pandemic, the current conditions offer a profitable opportunity to sell, especially if they do not require immediate reentry into the buying market.

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