The housing stock has increased, but so have the unsold homes
Rising housing inventories in 2024 may not be the positive sign of market health that they appear to be. High inventory levels contribute to another problem, as active listings remain unsold for extended periods. While higher home prices, rising mortgage rates and other costs are obvious factors, there could be more going on.
According to him, the rising supply is one of the highlights of the housing market of 2024 HousingWire Lead analyst Logan Mohtashami, who said housing inventory is approaching pre-COVID-19 pandemic levels in 2019. More inventory should be a sign of the market’s return to normality, according to Mohtashami, as the market enters 2025 up 27% stock compared to early 2024.
But Redfin‘s unsold inventory November reportreleased Monday adds another layer of concern to the rising stock. The report focuses on homes that were on the market for at least 60 days at the end of the month. Redfin calls these listings “stale inventory.”
According to the report, 54.5% of homes remained unsold for at least 60 days in November. That share is 460 basis points higher than a year ago, and it is the highest share since November 2019. Homes that went into contract took 43 days – the slowest pace since 2019.
Texas and Florida – two states that saw significant listing growth in 2024 – had the highest shares of obsolete inventory. Miami had the highest rate (63.8%) of the 50 largest U.S. metro areas. Austin (62.4%), Fort Lauderdale (62.3%), San Antonio (60.3%) and Orlando (59.9%) rounded out the most stagnant metro areas.
Some agents attribute outdated inventory growth to unreasonable prices that discourage potential buyers from pursuing certain offers.
“Many listings on the market are old or uninhabitable,” Redfin Premier agent Meme Loggins said in a statement. “I explain to sellers that their home will remain on the market if it is not priced fairly. Homes that are priced right and in good condition fly off the market within three to five days, but homes that are overpriced can sit for more than three months.”
Combined with Loggins’ comments, a separate Redfin tenant report The figures released on Monday show that the supply of owner-occupied homes is growing partly because tenants are moving less often.
According to Redfin, 33.6% of American renters stay in their rental home for at least five years. Ten years ago that share was 28.4%. About one in six tenants will live in a home for ten years or more. Simply put, some renters are choosing to avoid rising homeownership costs, moving costs and real estate agent fees, Redfin explains.
In November, Redfin also reported that growth in the number of renter households is significantly outpacing that of homeowners, demonstrating a shift in market dynamics.
“Rents rose during the pandemic but have remained relatively flat over the past two years as house prices and mortgage rates continued to rise. That has encouraged renters to stay in the same home, where they are less likely to experience large rent increases,” Redfin senior economist Sheharyar Bokhari said in a statement. As newly built apartments come onto the market, rents could drop and become a tenant market by 2025.
There is some hope for potential buyers and sellers as mortgage rates fall. HousingWire predicts an easing of mortgage rates to levels between 5.75% and 7.25%. Home sales may also increase as the lock-in effect loosens its grip on homeowners. But home price growth is unlikely to falter in 2025, so inventories could stagnate.
