An uneven residential sales market continues to benefit housing supply, with the inventory of homes for sale rising 67.8% year over year in February, according to Realtor.com.
That’s the sixth straight month that inventory has risen at a record annual pace, per Realtor.com’s data. There were 577,972 active listings in February, roughly 234,000 more homes available to buy compared to the same month last year. Notably, however, supply remains down compared to the years immediately preceding the COVID-19 pandemic. In comparison to 2017 to 2019, inventory was 47.4% lower in February 2023.
With interest rates on the rise again and buyers grappling with persistent affordability issues, inventory growth is being driven by homes spending more time on the market. The typical home sold in February spent 67 days on the market — 20 fewer days on the market than during the average February from 2017 to 2019 but 23 days longer than last year.
Mirroring the U.S. at large, homes are taking longer to sell in the country’s biggest cities than they did last year. Of the nation’s 50 largest metros, 47 saw an annual increase in time on market. Austin saw the largest jump in time on market (52 more days this year than last year), followed by Raleigh (51 days), Denver (42) and Las Vegas (42). Each of these cities saw a bump in home sales due to having less-expensive homes than larger nearby cities, but as their pipelines have normalized and affordability has waned, homes have begun to linger in listings for longer.
Selling activity also continues to dwindle, with fewer newly listed homes in February compared to the same time last year. There were 312,196 newly listed homes last month, down 15.9% year over year. New listings also remain 27% below the levels seen from 2017 through 2019.
Home prices are still rising, with the median price of homes for sale reaching $415,000 in February, up 7.8% yearly. But that’s lower than January’s 9.7% annual growth rate, as February continued a now long-standing pattern of declining price growth. Meanwhile, the share of homes with price reductions grew from 5.4% in February 2022 to 13% this year.
Realtor.com economists Danielle Hale and Sabrina Speianu noted that the share of homes with price reductions declined from January to February and that this drop-off appears to be larger than typical seasonal movements. “In the past we have seen price reductions act as a leading indicator to median list price growth,” the pair wrote on Realtor.com. “While only one month does not make a trend, this could signal a cushion for price growth.”