Rising housing inventory levels in 2024 may not be as positive a sign of market health as it seems. High inventory levels create another problem, as active listings can go unsold for long periods of time. Rising home prices, rising mortgage rates, and other expenses are clearly factors, but there may be more to the story.
Rising supply will be one of the highlights of the housing market in 2024, with housing inventory approaching pre-pandemic 2019 levels, according to HousingWire Principal Analyst Logan Mortashami. He said there was. The increase in inventory should be a sign that the market is returning to normality, as the market enters 2025 with 27% more inventory than at the beginning of 2024, Mortashami said.
But Redfin’s November unsold inventory report released Monday adds to concerns about rising inventories. This report focuses on homes that have been on the market for at least 60 days at the end of the month. Redfin refers to these listings as “stale inventory.”
According to the report, 54.5% of residential properties remained unsold for at least 60 days in November. This share is up 460 basis points from a year ago and is the highest share since November 2019. Homes took 43 days to close, the slowest pace since 2019.
Texas and Florida, which saw the largest increases in listings in 2024, had the highest percentages of obsolete inventory. Miami had the highest rate (63.8%) of the 50 metropolitan areas in the United States. Austin (62.4%), Fort Lauderdale (62.3%), San Antonio (60.3%) and Orlando (59.9%) were the most stagnant metro areas.
Some agents believe that increased inventory deters prospective buyers from pursuing certain items due to unreasonable prices.
“Many of the properties on the market are outdated or uninhabitable,” Redfin Premier Agent Meem Loggins said in a statement. “I tell sellers that if the price isn’t right, the house will go on the market, whereas a house that’s priced well and in good condition will be off the market in three to five days. , overpriced homes can sit for more than three months.”
Paralleling Loggins’ remarks, a separate Redfin Lease Term Report released Monday suggests that supply for sale is increasing, in part because renters are moving less frequently. .
According to Redfin, 33.6% of renters in the United States have lived in their rental home for at least five years. Ten years ago, that share stood at 28.4%. Approximately one in six renters stayed in their home for more than 10 years. Simply put, some renters are choosing to avoid rising homeownership costs, moving costs and brokerage fees, Redfin explained.
Redfin also reported in November that growth in rental households was significantly faster than growth in homeownership, indicating a shift in market dynamics.
“Rents have soared during the pandemic, but have remained relatively flat over the past two years as house prices and mortgage rates continued to rise. “They are unlikely to face significant rent increases,” Redfin senior economist Sheharyar Bokhari said in a statement. As new apartments come on the market, rent prices will fall, and a rental market could become established by 2025.
Lower mortgage rates offer some hope for potential buyers and sellers. Housing Wire expects mortgage rates to ease to a level of 5.75% to 7.25%. Home sales may also increase as the lock-in effect eases the impact on homeowners. But with home price growth unlikely to shake out in 2025, inventory could remain stagnant.
