SANTA CLARA, CA — As the spring season unfolds, the real estate market is exhibiting optimistic signs for buyers, highlighted by an increase in housing inventory and a notable rise in price reductions, according to the latest report from Realtor.com®. This shift could signal a move towards a more balanced market, providing a glimmer of hope for those looking to purchase homes.
In March, the share of homes with price reductions climbed to 15.0%, marking the largest percentage in five years. Simultaneously, the total number of homes actively for sale surged by 23.5% compared to last year. However, it’s crucial to recognize that these figures still fall short of the pre-pandemic market levels.
“Sellers are gradually becoming more comfortable with the market conditions, leading to increased listings and competitive pricing trends,” said Danielle Hale, Chief Economist at Realtor.com®. This trend is particularly evident as we approach what is traditionally considered the best time to sell, between April 14th and 20th. With seller optimism on the rise, further inventory gains are anticipated, potentially easing the competition among homebuyers.
The report also sheds light on regional differences, listing the ten metro areas with the largest share of price reductions. Tampa-St. Petersburg-Clearwater, Fla., leads the pack with 27.6%, followed closely by Phoenix-Mesa-Chandler, Ariz., and Austin-Round Rock-Georgetown, Texas. These reductions are more pronounced in the South, which saw a 3.5 percentage point increase compared to last year.
Inventory levels have seen the most significant growth since 2020 between January and March 2024, although they remain 37.9% below pre-pandemic figures. The price range experiencing the most substantial inventory increase is between $200,000 and $350,000, growing by 30.5% from March 2023. Notably, metros like Tampa, Orlando, and Miami have seen dramatic increases in active listings.
Despite these positive trends, the national median list price shows a modest year-over-year increase of only 0.2%, from $415,500 in February to $424,900 in March 2024. Some metros, including Miami, Oklahoma City, and San Francisco, even experienced declines in median list prices compared to the previous year. Conversely, Los Angeles, Richmond, and Pittsburgh saw significant price growth.
The fluctuations in list prices, coupled with mortgage rates hovering between 6.6% and 7% for the past three months, have impacted the financing cost of purchasing a home, which has increased by $63 compared to last March.
This evolving landscape offers a nuanced view of the market, suggesting a gradual shift towards balance. Increased inventory and the uptick in price reductions are encouraging signs for prospective buyers who have faced a challenging market in recent years. However, the relatively stable median list price, alongside rising mortgage rates, indicates that affordability remains a concern.
For sellers, the current environment presents an opportunity to enter the market with realistic expectations regarding pricing and timing. As the market continues to adjust, both buyers and sellers must stay informed and flexible to navigate the complexities of real estate transactions successfully.
As the industry watches these developments unfold, the potential for a more balanced and accessible housing market looms on the horizon, offering opportunities for both buyers and sellers to achieve their goals in the coming months.
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