Which metro areas are seeing a surge in home sellers?

Despite the hurricanes in Florida and in light of recently rising mortgage rates, the unsold inventory of homes on the market rose about 1% this week. We expected the stock to rise and rise again next week before the seasonal stock declines begin in November. The seasonal changes in the housing market are very different than in the past, with inventory peaking two or three months later in the year.

If you’ve been paying attention, you know that housing supply is not only made up of unsold stock, but is also a factor in the number of new homes added each week. The supply is how many homeowners want to sell, not just how many homes are available to buy. The signal we look for when counting new listings is whether there are too many sellers. All bearish scenarios for home prices require more sellers each week. So far in the years since the pandemic, we haven’t had many vendors. Homeowners stay put.

That’s true nationwide, but here’s what we wanted to learn this week: Are there local markets where vendors are rushing for the exit? We know stocks are up in Phoenix and Dallas, but can we gauge the investors panic selling or the home builders dumping their stocks to get out?

Let’s look at the data here in mid-October 2024.

Stock expanded

The available inventory of unsold homes on the market increased by about 1% nationwide this week, or 7,000 single-family homes. That is a healthy increase.

Last year, stocks rose 1.5% in the same week of mid-October, now the pace is up 1%. There are 33% more homes on the market than a year ago. But because inventories rose so quickly in the fourth quarter last year, that difference is smaller than the 40% increase in September. That’s why we track this change every week. Last year, in the fourth quarter, buyers ran for the exits. It’s a completely different market now. Every time mortgage rates rise, homebuyers have shown they are willing to wait until conditions are back in their favor.

Interestingly, the stock is now only 21% less than in 2019. We’re using 2019 as a somewhat arbitrary baseline because that was the last year before the pandemic. In the fourth quarter of 2019, the stock fell rapidly. Mortgage rates had peaked and home buying conditions were improving.

New entries

There were just over 60,000 new listings unsold this week. That is only 6% more than a year ago.

There were another 10,000 new immediate sales listings, for a total of 70,000 sellers this week, which is only 4% more sellers than a year ago. There are more sellers nationally, but just a little more. There are no signs to be found in the national numbers of homeowners running for the exits. Last year, there were fewer sellers each week, but demand was also weaker, causing unsold inventory to pile up faster.

The most important thing to watch for with the new offerings is as we transition from an era with very few sellers to one with a historically normal level of sellers. There are now 60,000 to 70,000 new listings every week, while in pre-pandemic times there would have been 80,000 sellers per week.

There is no evidence that seller supply is increasing significantly. The trend has been slow incremental growth throughout the year. There are no signs of that trend changing.

New listings by metro

But I was curious. Are there local markets where we could see homeowners, investors or builders running for the exits?

Austin now has more inventory on the market than at any time in the past decade. Is that stock rising as sellers flood the market? In fact, no. It turns out that Austin now has 3% fewer new listings each week than in 2019. A major shift in homebuyer demand has pushed Austin’s inventory up over the past two years, but because there still aren’t as many sellers, inventory is showing up of Austin does not. ready to grow a lot from here.

What about Tampa or Sarasota? Are sellers unloading after the hurricanes? It turns out: no, the opposite happens. There are fewer vendors than normal, which makes sense given the devastation, but it’s worth checking the data to verify. Maybe next year will be the time for more vendors in Florida, but not yet.

Of the 100 largest inventory metros across the country, 76% now have fewer new listings each week than in 2019. There are just a few markets that stand out with many more sellers each week: Spartanburg, South Carolina; McAllen, Texas, and maybe Huntsville, Alabama. Spartanburg now has 53% more sellers than in 2019. McAllen has 44% more and Huntsville 29% more. All three markets are in which investors and builders intervene heavily. They are all small towns. Perhaps there is a nexus of builders, investors and slowed migration patterns in 2024 that led to that build-up?

The takeaway from the local new listing data is that most of the country is poised to see inventory declines as mortgage rates fall and boost demand. Almost none show signs of being seller-led.

Pending home sales increased

There were 60,000 single-family home owners across the country responding to offers and signing contracts this week. That is 9% more than last year and even 11% more sales contracts have been started than in the same week of October 2022.

A total of 358,000 single-family homes are under contract. That is 10% more than last year and 2% more than the same week in October 2022. It is the first time in two years that more homes are under contract.

Again, this isn’t really about home sales growth, just a little bit of growth. Because the fourth quarters of 2022 and 2023 were so weak, the comparison is simple. We are very slowly adapting to this new normal of higher mortgage rates. Current pending sales got a boost last month from lower mortgage rates, but those mortgage gains have now disappeared. This progress is just good enough to show some year-over-year gains, and may be transitory. Although I expect you’ll see some headlines in the fourth quarter that say home sales are higher than last year. Traditional data will pick up this transition.

These gains may be transient. Homebuyers aren’t afraid to walk away when money becomes more expensive. Additionally, many of Florida’s major markets are at a standstill, which are large enough to move the national numbers. While recent trends have been somewhat positive, recent weeks have reversed any home sales momentum that might have begun.

House prices unchanged

House prices are largely unchanged this week. The average price of single-family homes under contract was $389,000 again this week. Prices are holding up better than I expected at the beginning of this year and are about 5% higher at this time than last year.

The average price of all homes in the US is currently $439,900. That is also unchanged from last week and only 1% more than a year ago. Asking prices are 1% higher than a year ago, contract prices are 5% higher than the same period. You can see the range for this year’s home price increases being 1-5% depending on how you measure home prices.

It’s amazing how quickly sentiment can change in a week. We thought we were at a transition point to get some home sales growth, and suddenly we were experiencing big spikes in mortgage rates. We know that buyers can put on the brakes very quickly. At some point we may see sellers in some local markets become restless.

Mike Simonsen is the founder of Altos Research.