US Housing Supply Jumps 12 Percent From Same Time Last Year: Report

A For-Sale sign displayed in front of a home on February 22, 2023 in Miami, Florida. Joe Raedle/Getty Images

The supply of homes for sale in the United States increased 12 percent from this time last year, with many sellers listing properties to take advantage of current high prices, according to real estate brokerage Redfin.

Active listings sat at 954,703 units during the four weeks ending December 22, according to data collected by the company. The jump in supply coincided with a median sales price rise of 6 percent on an annual basis.

“Active listings are rising in part because many homes are lingering on the market, causing supply to pile up,” Redfin said in a Dec. 27 statement.

Sellers are asking higher prices for their properties, as reflected by the rise in median asking price.

In addition, “consumer confidence rose to a 16-month high after November’s election, motivating more sellers to make the major financial decision to list their homes,” Redfin said. “Some sellers are hoping to take advantage of the increased home buying demand Redfin has seen over the last month.”

Out of the 50 most populous U.S. metros tracked by the brokerage, Oakland had the largest increase in new listings year-over-year at 9 percent. This was followed by Las Vegas, Tampa, Phoenix, and Virginia Beach.

Despite the increased supply, the shortage of homes continues to remain a problem, contributing to a worsening affordability situation. Freddie Mac calls housing affordability “one of the top economic issues facing American households.”

In the third quarter of 2020, the estimated housing shortage was 3.8 million units, which dipped slightly to 3.7 million for the third quarter of this year. As such, the housing supply hasn’t been able to resolve the shortage issue for nearly four years.

“Inadequate housing supply leads homeowners and renters to bid up the sale price and rent of available housing, which puts a squeeze on affordability,” Freddie Mac said.

“Both homeowners and renters have seen the cost of housing increase faster than other consumer prices, putting a significant strain on household budgets.”

Construction Issues

While the supply situation remains tight, builders are wary about the current construction environment.

They have expressed “concerns that high interest rates, elevated construction costs, and a lack of buildable lots continue to act as headwinds,” said Carl Harris, chairman of the National Association of Home Builders (NAHB). However, “they are also anticipating future regulatory relief in the aftermath of the election.”

In December, 31 percent of builders were found to have reduced home prices to attract customers while 60 percent offered sales incentives—numbers similar to that of November.

NAHB chief economist Robert Dietz blamed regulations and local opposition to residential projects as creating challenges for builders and hampering affordable housing construction projects in urban regions.

As a result, residential construction is shifting to areas with low population density, he said.

“Policymakers at all levels of government need to eliminate excessive regulations, ease permitting roadblocks, and promote careers in the skilled trades to allow builders to construct more homes and apartments across the nation.”

A November survey from Fannie Mae found that far more people find it challenging to find affordable housing these days compared to 2017 amid rising prices and mortgage rates.

When asked about building more affordable housing in their neighborhoods to resolve the situation, only 44 percent of homeowners approved of the measure compared to 73 percent of renters.

Renters were also found to be more likely to back other housing construction projects like apartments, condos, and townhomes.

In addition, respondents were not convinced that boosting supply would improve the affordability situation.

“While most economists agree that building more homes will help slow price appreciation for buying and renting, consumers are less convinced. In fact, 59 percent say they believe home prices will increase in their neighborhood if more homes are built, while just 13 percent say home prices will decrease,” according to Fannie Mae.

“One possible explanation for this discrepancy may be that many assume the homes being built would not be what they consider affordable.”