The U.S. housing market is currently experiencing an unexpected surge in unsold inventory. Eight states now have more unsold homes than in 2019, indicating a significant shift in the market dynamics. The increase in unsold homes, however, is not evenly distributed across the country.
What Happened: Research firm Altos Research reported a 40% increase in homes on the market at the end of August 2024 compared to the same period last year. This equates to over 700,000 unsold single-family homes, with about 10% going into contract each week.
The rise in inventory is not uniform across the country. States like Florida and Arizona have seen a 70% increase in unsold homes compared to last year, while New York has only a 10% increase, reports Housingwire.
Eight states – Alabama, Arkansas, Florida, Idaho, Oklahoma, Tennessee, Texas and Utah – have more unsold inventory than in 2019.
John Burns Real Estate Consulting attributes these inventory trends to migration patterns during the pandemic. Many of these states were popular destinations for inbound migration, leading to increased home construction.
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However, the rise in mortgage rates since 2022 has slowed down migration, contributing to the inventory build-up.
Other factors, such as increased costs of homeownership, including taxes and insurance, have also contributed to the rise in unsold inventory. For instance, homeowners in Texas and Florida are grappling with higher taxes and insurance costs, respectively.
Why It Matters: The trend of unsold inventory could be a sign of a return to “normal” markets, offering more selection for homebuyers. However, it could also indicate potential price adjustments in areas with a greater supply of unsold homes.
The housing market dynamics are influenced by a variety of factors, including migration patterns, mortgage rates, and costs of homeownership.
Understanding these factors can help potential buyers and sellers make informed decisions.
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