Altos Blog

Which Metros Are Seeing a Surge in Sellers?

Written by Mike Simonsen | October 21, 2024 6:28:26 PM Z

Despite the Florida hurricanes, and in the face of recently rising mortgage rates, unsold inventory of homes on the market climbed this week by about 1%. We’ve been expecting inventory to climb, and expect it to tick up again next week before seasonal inventory declines start in November. The seasonal changes in the housing market are very different from what they used to be with inventory peaking two or three months later in the year.

If you’ve been paying attention, you know that the housing supply isn’t just the unsold inventory, it’s also a factor of new listings volume each week. Supply is how many homeowners want to sell, not just how many homes are available to buy. The signal that we watch for in the new listings count is whether there are too many sellers, people rushing for the exits. All the bearish scenarios for home prices require more sellers each week. And so far in the post-pandemic years, we haven’t had a lot of sellers. Homeowners are staying put. Last week we discussed the phenomenon we call "The Great Stay."

That’s true nationally, but here’s what we wanted to learn this week: are there any local markets where sellers are rushing to the exits? We know that inventory is up in Phoenix and Dallas, but can we measure for example investors panic selling, or homebuilders dumping inventory to get out? Are there any canaries in the coal mine?

In this week’s video, we’re going to take a slightly different path than our usual stats to look at the new listings per local market. We’ve picked out the 100 biggest metros in the country. Stay tuned for what we learned.

Every week Altos Research tracks every home for sale in the country. We analyze all the pricing, supply and demand, and all the changes in that data and we make it available to you before you see it in the traditional channels. If you aren’t using Altos market reports with your clients, your buyers and sellers, now might be the time to step up. Go to altosresearch.com and book a free consult with our team. Because everyone is worried about what’s happening right now. They need you to help them see clearly. The data we cover here in these national videos is available for every zip code in the US. Join us to dive in.

I’m Mike Simonsen, I’m the founder of Altos Research. Let’s look at the data for the week of October 21, 2024. Please refer to the video below for all the charts I mention in this transcript!

 


Inventory

 

Let’s start with inventory. Available inventory of unsold homes on the market expanded across the country this week by about 1%, or 7,000 single family homes. That’s a healthy increase. It’s more than most recent weeks, but a smaller increase than was happening last year at this time. Last year inventory rose by one and a half percent in the same mid-October week, now the pace is 1% gains. There are 33% more homes on the market than a year ago. But because inventory was rising so quickly in the fourth quarter last year, that gap is down from 40% increases in September. That’s why we’ve been tracking this change each week. Last year in the fourth quarter, buyers were running for the exits. It’s a very different market now. It’s not a great market of course. Every time mortgage rates rise, homebuyers have shown they’re perfectly willing to wait for conditions to return to their favor. 

Interestingly, inventory is now only 21% fewer than in 2019. We use 2019 as a bit of an arbitrary baseline, because that was the last pre-pandemic year. In the fourth quarter of 2019, inventory was falling quickly. Mortgage rates had peaked and home buying conditions were improving. In this chart see in the top group the 2019 line dropped quickly in the fourth quarter. These days the seasonal variations are less and later in the year. I think we have two more weeks of inventory growth. Unless mortgage rates don’t cooperate. If rates go up, buyers will back off and inventory will climb into November like it did in 2022 and 2023. 

 

New Listings

 

So that’s the inventory, but as I mentioned, we want to focus this week on the new listings volume. There were just over 60,000 new listings unsold this week. That’s just 6% more than a year ago.

There were another 10,000 new listings immediate sales, so overall that was 70,000 sellers this week, which is just 4% more sellers than a year ago. There are more sellers nationally, but just a little bit more. No signs in the national numbers of homeowners running for the exits. Last year there were fewer sellers each week but demand was also weaker, so the unsold inventory was piling up faster. 

The important thing to watch for with the new listings is when we transition from this era of very few sellers to one with a more historically normal level of sellers. There are 60-70,000 new listings each week now, when in the pre-pandemic times there would have been 80,000 sellers per week. We know as of now there is no transition to more sellers happening at the national level. There is no evidence of seller supply increasing significantly. There are just a few percent more sellers each week than a year ago. The trend has been slow incremental growth all year. There’s no sign of that trend changing. You can see this national trend here, with the red line still bumping along near the bottom, showing many fewer sellers than in most previous years.

New Listings Per Metro


But I was curious. Are there any local markets where we can see homeowners, or investors, or builders running for the exits? Are there any canaries in the coal mine? For example, Austin has more unsold inventory sitting on the market now than any time in the past decade. Is that inventory surging from sellers flooding the market? In fact, no. It turns out that Austin has 3% fewer new listings each week now than in 2019. A big shift in home buyer demand drove Austin's inventory up over the last two years, but because there still aren’t that many sellers, Austin’s inventory does not appear poised to grow much from here. 

What about Tampa or Sarasota? Are sellers unloading after the hurricanes? It turns out, no, the opposite is happening. There are fewer sellers than normal, which makes sense given the devastation, but it is worth checking the data to verify. Maybe next year is the time for transition with more sellers in Florida, but not yet. Keep watching.

Of the 100 biggest inventory metros around the country, 76% have fewer new listings each week now than they did in 2019. There are only a couple markets that stand out with a lot more sellers each week now. Spartanburg, South Carolina, McAllen, Texas, and maybe Huntsville, Alabama. Spartanburg has 53% more sellers now than in 2019. McAllen has 44% more, and Huntsville 29% more. All three of these are investor heavy and builder heavy markets. They’re all small towns. But maybe there’s a nexus of builders, investors and slowed migration patterns in 2024 have led to that buildup in those three markets. 

We built an interactive chart of the hundred metros, so you can search for any market you care about.

The takeaway on the local new listings data is that most of the country is poised to have inventory decline if mortgage rates fall and stimulate demand. There are almost none with any signs of seller-led supply.

 

Pending Home Sales


On to the pending sales. There were 60,000 single family homes which took offers and went into contract this week across the country. That’s 9% more than last year and in fact 11% more sales contracts started than the same week in October 2022. 

Overall there are 358,000 single family homes in contract. That’s 10% more than last year and 2% more than the same week in October 2022. This is the first time in two years that there are more homes in contract. This total pendings count is the chart I’m showing here. These are all the homes in contract, scheduled to close in the next 30 or 40 days. See the dark line for this year is staying elevated just long enough to show growth over last year and over 2022. 

Again, this is not really about growth in home sales, just a tiny bit of growth. Rather, because the fourth quarters of 2022 and 2023 were so weak, the comparison is easy. We’re just very slowly adjusting to this new normal of higher mortgage rates. The current pending sales got a boost from lower mortgage rates last month, but those mortgage gains are gone now. So this progress is just good enough to show some year-over-year gains and it may be fleeting. Though I expect in the fourth quarter you’ll see some headlines that say home sales are up over last year. The traditional data will start to pick up this transition.

I’ve said a lot recently, that these gains could be fleeting. Home buyers are not afraid to walk away when money gets more expensive. Also, a lot of the big Florida markets are at a standstill and those are big enough to move the national numbers. So while the recent trends are a little positive, the last few weeks have maybe reversed any home sales momentum that might have been started.

Home Prices


Home prices are largely unchanged this week. The median price of single family homes going into contract was $389,000 again this week. Prices continue to hold up better than I expected early in the year and are about 5% greater than last year at this time. 

The median price of all the homes in the US right now is $439,900. That’s also unchanged from last week and is just 1% more than a year ago. Asking prices are 1% higher than a year ago, the contract prices are 5% above that same period. You can see the range for the year’s home price gains 1-5%, depending on how you measure home prices.

About 6 weeks ago, as the summer drew to a close with mortgage rates staying higher for longer than anyone expected during the year, we could see prices waning. Inventory was building up, buyers had more selection and less competition, affordability is obviously strained. The price paid for homes dipped to $380,000. But then mortgage rates took a big step down and buyers noticed. This pending price metric jumped. That resurgence of price was a bit of a surprise to me, I expected some demand increase but I would have assumed the price point would stay the same. In the chart here you can see the year’s dip in pricing in August before a resurgence in September. 

Like the sales volume comparison I mentioned already, the price comparisons vs 2022 and 2023 are much easier now too. I’ve highlighted on this chart the period in October 2022 when mortgage rates spiked to 7.5%, homebuyer demand backed way off, and prices dropped by several percent. It’s wild to think, but even with affordability challenges still very prominent, we’re still in better home buying conditions than we’ve seen in a couple years. 

It’s wild how quickly the sentiment can change in a week. We were maybe at a transition point to get some home sales growth, and suddenly we had very big mortgage rate spikes. We know that buyers can put the brakes on very quickly. So potential home buyers and sellers need to hear the data from you so they know how to act. If you need to advise people in the real estate market you should join us at Altos.

Go to AltosResearch.com and book time with our team to learn more.

You can also run a free Altos real estate market report for any zip code in the U.S. and receive an update on that area in your inbox every week.

And, if you want to learn how to read and interpret all the stats in the report, I encourage you to download our free eBook: "How to Use Market Data to Build Your Real Estate Business."

See you next week!