After two years of double-digit home price increases and 13 consecutive months of record home value growth, active demand has fallen by 30% in the last year while new supply is dwindling. Active for-sale inventory is nearly 40% below pre-pandemic levels and new for-sale listings were also down 16% year-over-year in September, and that glut of inventory could sustain elevated prices even as demand continues to taper off, Zillow reports.
Home sales are falling at a faster rate than new homes are coming onto the market, and while prices are falling amid softer demand from prospective buyers, a decrease in new listing activity is keeping housing affordability tight even during a market correction.
A pullback in demand has pushed prices downward, but while the housing market isn’t nearly as tight as it was earlier, a lack of for-sale listings is providing some support for prices against further declines. Months’ supply — a gauge of market tightness which measures how long it would take for all active for-sale listings to sell, given the current volume of sales – has increased by 29 days when compared to a year ago but remains well below pre-pandemic levels, still down 40 days when compared to September 2019.
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