The supply of homes for sale in the United States began to show signs of improvement in April 2022 according to new data from Realtor.com, which stated that the number of salable homes would increase in the next few weeks due to fewer buyers.
April housing inventory was 12 percent lower than in the same month in 2021, the smallest year-over-year decline since the end of 2019, but higher mortgage rates combined with record home prices are removing much of the competition from the market during the popular spring buying season, which is leading to a slowdown in bidding wars.
However, the number of active listings is still down by 67 percent from pre-pandemic levels, with new listings down by 0.9 percent in April 2022 compared to the previous year. The typical home spent just 34 days on the market in April, six days fewer than a year ago.
The growth of supply is likely due to a slower sales pace stemming from the recent massive jump in mortgage rates, which has made single family units too expensive for many home buyers. The average rate for a 30-year fixed mortgage has jumped more than 2.5 percentage points since the start of 2022.
Fewer midsized family homes were sold in April 2022, and monthly mortgage payments were nearly 50 percent higher than in 2021 for a house of the same value. The median home price has increased by 32 percent in the past two years to $425,000, a 14.2 percent rise compared to April 2021.
“These trends together should bring more balance to the housing market that is expected to help cool the pace of price growth,” said Hale on Realtor.com. “If home shoppers can navigate higher housing costs, they should have more options to choose from in the near future and less competition from other aspiring homebuyers.”
Despite inventory growth having improved with fewer buyers and more sellers, worsening affordability conditions are not exactly benefiting the market.
A recent Gallup poll found about 70 percent of Americans say now is a bad time to buy a home, the highest figure since the pollster began covering the issue back in 1978.
For a buyer who closed on a house in April 2021 and now has a mortgage payment of $1,260 a month, the increase in mortgage rates over the past year means that if they had waited a year and closed on the same house in April 2022, they'd be paying $1,820 per month, according to Realtor.com.
“That’s a huge swing for home shoppers to navigate when they’re also likely navigating rising costs for things like gas, groceries, and utilities,” said Hale.
“Even in the face of higher home costs, there are some factors keeping home shoppers highly motivated,” Hale stated on Realtor.com. “One, rents continue to surge by much more than normal, so many potential first-time buyers are looking to escape not only this year’s increases but future rent hikes, too.”
Hale said many homebuyers already anticipate that mortgage rates will continue to rise. This provides them with a strong impetus to buy as soon as possible after they spot a home they like.
“We still have a lot of young buyers who are looking to make moves into homeownership,” she said.
