The U.S. housing market saw signs of continued recovery this spring, with more homes hitting the market and total inventory rising for the 17th straight month, according to the聽. However, rising price drops and slipping pending home sales suggest that buyers are proceeding with caution, likely due to current economic unknowns and growing concerns among consumers around their personal finance situations.
鈥淭he spring housing season is beginning with more sellers and a growing number of homes for sale,鈥� said聽Danielle Hale, Chief Economist at Realtor.com. 鈥淏ut the high cost of buying coupled with growing economic concerns suggest a sluggish response from buyers in early spring. We鈥檙e seeing a market that鈥檚 rebalancing, offering more choices for shoppers. Data also suggest that pricing competitively is key for sellers in today鈥檚 environment. This is likely to be even more true after the mid-April聽, when the number of sellers grows even more swiftly. Recent improvements in mortgage rates bode well for the later spring and early-summer housing season, as long as economic concerns settle and don鈥檛 knock buyers off course.鈥�
Pending Home Sales Slide as Buyers Tread Carefully
According to pending home listings data from Realtor.com, buyer momentum took a step back in March as the number of homes under contract, pending listings, fell 5.2% YoY in the nation鈥檚 largest metro areas.聽 Of the 44 metros analyzed for this metric, 36 posted declines in pending sales compared to last March. Some of the steepest drop-offs were seen in聽Jacksonville听补苍诲听Miami, Fla.聽(-15.1%, -13.7%) where the market has been softening as of late, and聽Virginia Beach, Va.聽(-14.2%), which has a high share of federal government workers to round out the top three markets seeing pending home sales decline. Interestingly,听Washington D.C., which also has a high share of federal government workers placed 10th, with a yearly decline of 7.9%.
At the same time, a few markets bucked the trend including聽San Jose, Calif.听(+6.4%),听Grand Rapids, Mich.聽(+6.1%) and聽Sacramento聽(+4.6%), which all posted YoY gains in pending listings, suggesting that local dynamics, such as tighter supply or improved buyer sentiment, may be keeping those markets more competitive.
Price Cuts Hit a March Record as Sellers Adjust to Budget-Conscious Buyers
List prices remained relatively stable, with the national median list price at聽$422,450, down just 0.1% from a year ago. However, more sellers are making adjustments as 17.4% of active listings included price reductions in March, the highest share for any March since 2016.
Markets with the highest share of price reductions included聽Phoenix, Ariz.听(32.6%),听Tampa, Fla.聽(28.9%) and聽Jacksonville, Fla.聽(27.7%), where elevated inventory levels and/or tempered demand are putting pressure on sellers to stay competitive. On the other end of the spectrum, markets like聽Buffalo, N.Y.听(5.4%),听Hartford, Conn.聽(5.5%) and聽New York聽(7.0%) saw the lowest share of price cuts, signaling tighter inventory and firmer pricing power. For buyers, this means greater negotiation room in some areas, while in others, competition and pricing remain relatively strong. Sellers in high-reduction markets may need to recalibrate expectations, while those in tighter markets can still benefit from solid demand, as long as they price appropriately.
Inventory Grows in the West and South, but the Pre-Pandemic Supply Gap Remains
In March, the total number of homes actively for sale jumped 28.5% compared with a year ago, and newly listed homes climbed 10.2%, the strongest March showing in three years. At the local level, all 50 of the largest metro areas posted annual inventory gains, with the most significant increases seen in聽San Jose, Calif.听(+67.9%)听Las Vegas, Nev.聽(+ 67.8%), and聽Denver, Colo.聽(+67.3%). Not only did聽San Jose,听Denver听补苍诲听Las Vegas聽experience significant gains YoY, they are part of the group of 18 metros where inventory levels now exceed pre-pandemic levels including聽San Antonio, (+49.6%)聽Dallas聽(+44.9%), and聽Austin聽(+44.2%). Despite this progress, the total U.S. housing inventory remains 20.2% below typical levels seen from 2017 to 2019, with markets in the Northeast lagging nearly one-third below what was typical in that period. This is consistent with聽聽showing the biggest construction shortfall and no progress toward closing it in the Northeast.
For more information, visit聽聽where monthly housing data sets, including historical figures, are available for download.
