The real estate landscape is undergoing a significant transformation. Gone are the days when sellers held all the cards in an intense market frenzy. Recent trends indicate a cooling off, signaling a move towards a more balanced housing market. Let’s dive into what’s happening and what it means for buyers and sellers alike.

Easing Sales and Increasing Supply

After a blistering spring that saw extreme seller’s market conditions, August brought a noticeable shift. Sales activity has begun to wane, and supply has started to climb. For the first time since late 2022, the months of supply exceeded two, indicating a move away from the scarcity-driven frenzy.

Ann-Marie Lurie, Chief Economist at CREB®, highlights this change: “As expected, rising new home construction and gains in new listings are starting to support a better-supplied housing market.” She anticipates this positive trend will continue throughout the year. However, she cautions that while overall supply is improving, particularly in higher-priced homes, lower-priced properties are still in short supply. Achieving a truly balanced market will take time, especially for those seeking more affordable options.

Inventory Insights

In August, housing inventory reached 4,487 units. This figure marks a 37% increase compared to August of last year, yet it remains nearly 25% below long-term monthly averages. The boost in supply is primarily driven by higher-priced properties. Meanwhile, the most affordable homes across various types continue to experience declining supply, maintaining the pressure on budget-conscious buyers.

The Dynamics Behind the Supply Increase

The uptick in inventory can be attributed to two main factors: a rise in new listings and a slowdown in sales activity. August saw 2,186 home sales, which is a 20% drop from last year’s record high. Despite this decline, sales remain 17% above long-term monthly averages. The slowdown is particularly evident in homes priced below $600,000, where sales have dipped more sharply.

Slowing Price Growth

Earlier this year, the housing market saw robust price increases. However, August indicates that the momentum is beginning to taper off. The total unadjusted residential benchmark price stood at $601,800 in August, marking a 6% increase from the previous year and remaining slightly lower than July’s figures. Year-to-date, the average benchmark price has risen by nine%, showing that while prices are still climbing, the pace is moderating.

What Does This Mean for You?

For sellers, this shift could mean a slight easing in the competitive pressure, potentially allowing for more negotiation room. However, with overall supply still below long-term averages, particularly in the lower-priced segments, sellers of affordable homes may not feel significant changes just yet.

For buyers, increased inventory is a positive sign. More options on the market can lead to better choices and possibly more favorable pricing, especially as supply continues to grow and demand stabilizes.

Looking Ahead

The housing market is inching towards a more balanced state, moving away from the extremes of a seller’s market. While supply is on the rise and sales activity is cooling, it’s clear that the journey to a fully balanced market will take time, especially for affordable housing segments. Keeping an eye on these trends will be crucial for both buyers and sellers as we navigate the rest of the year.

Stay tuned for more updates and insights into the ever-evolving real estate market!