The persistent shortage that has plagued the U.S. housing market for years may be on the cusp of letting up, according to Redfin.
Per data from the national real estate brokerage, April had a 9% year-over-year decline in homes for sale — the smallest annualized decrease since March 2020 and the first single-digit drop in supply for any month since the COVID-19 pandemic started.
Rapidly rising mortgage rates coupled with home-price gains that remain high have helped to soften homebuyer demand, and the shifting tectonics of the market may finally be nudging inventory toward equilibrium.
“When market conditions are changing it becomes more difficult for homebuyers and sellers to see eye-to-eye on pricing,” said Redfin deputy chief economist Taylor Marr. “Many sellers are still seeking sky-high prices for their homes even though rising mortgage rates have limited homebuyer budgets. As a result, buyers are backing off, which is causing home sales to fall and the housing shortage to ease.
“As demand continues to soften, more sellers will likely be forced to drop their prices in order to get offers. The good news is that this should finally bring more balance to the market.”
Inventory shifts varied wildly in April across the country, with some cities seeing big increases in homes for sale while others saw inventory continue to plummet. Elgin, Illinois, saw the largest gain in homes for sale, up 32.6% year over year, according to Redfin. Among large cities, Chicago posted the largest annual addition to listings at 15.3%, followed by Detroit at 9.9%.
On the other side of the spectrum, Allentown, Pennsylvania, saw active listings sink 49.9% year over year. Greensboro, North Carolina (down 39.9%); Bridgeport, Connecticut (down 35.2%); and Fort Lauderdale, Florida (down 32.4%) also saw large year-over-year decreases in homes for sale.
While the inventory crunch may be showing signs of easing, homes continue to fly off the market quickly, with the typical home that sold in April going under contract in only 18 days, Redfin reported. That’s six days faster than the same month last year and the shortest average time on market ever recorded in April.
And in some areas, homes stayed on the market for a fraction of that span. Denver and Indianapolis were the fastest market in April, with half of all homes attaining pending-sale status in only four days.