Housing Inventory Is Climbing Back. So Why Are Leads Still Lagging?

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Imagine the housing market as a grocery store.

To continue this metaphor, in recent years the selection has been sparse and the shelves are poorly stocked – a typical Soviet real estate version of a supermarket. Quite depressing.

But recently, something has started to change.

“We’re seeing supermarket shelves starting to be restocked,” Ralph McLaughlin, senior economist at Realtor.com, told Intel recently. “They’re not fully restocked like they were pre-pandemic, but they’re getting restocked.”

So, the housing inventory situation in the United States is improving. That’s good news. But the market is actually complicated for a variety of reasons. So far, 2024 is not looking good.

To get a better understanding of the current situation, Intel spoke with economists and surveyed hundreds of real estate brokerage and brokerage leaders in late June as part of the Inman Intel Index research.

The lesson from these efforts is something of a double-edged sword: On the one hand, there is more inventory on the market than there was a year ago, but on the other, inventories remain well below pre-pandemic levels and demand remains subdued.

As a result, agents have become more reliant on their existing territories to navigate a market that remains challenging.

Inventory is improving

Experts who spoke to Intel about the matter agreed that overall inventory is improving.

• “We’re at the highest level of inventory for this time of year in at least the last four years,” Darryl Fairweather, chief economist at Redfin, recently told Intel. “We have about three months of inventory,” he added.
• McLoughlin said the South, where homebuilding is strongest, has seen the biggest improvement in inventory. “Supermarkets in the South are nearly as well-stocked as they were before the pandemic, and inventory is reasonably priced,” he said.

However, the trend of improving inventories is not limited to the South.

• “Unsold home inventory is increasing almost everywhere across the country, with every state seeing more inventory than this time last year,” Mike Simonsen, founder and president of Altos Research, told Intel.

The numbers back this up, with data showing a steady increase in active listings.

• The number of homes for sale is on the rise, according to data from Realtor.com. 37 percent Year-on-year change in June. At the same time, home sellers 6 percent Home sales increased in June compared to May, with the search portal’s June Housing Trends report ultimately concluding that “mortgage rates also stabilized in June, which helped stabilize the market.”
• According to data from Realtor.com: Upward trend It has been happening for a much longer period of time. The number of active listings is growing rapidly, 839,992 In June 70 percent This is more than the number of units on the market in the same month of 2021.
• Data from the National Association of Realtors shows a similar trend, with as of May 3.7 months The U.S. housing market has about 1 million homes in stock, up from a low of about 10,000. 1.6 months In stock early 2022.

So where is the revenue coming from having more homes on the market?

A few months’ worth of inventory and active listings might give the impression that the U.S. housing market is booming after years of stagnation. So-called supermarkets appear to be restocked and ready to open for business.

But anyone who works in real estate knows it’s not that simple. And part of what’s happening now is why In fact, active listings are on the rise.

• Fairweather explained: new The number of properties listed has increased compared to 2023, butOnly 10 percent“And it’s still lower than 2021 and 2022. In other words, inventory isn’t increasing because there are so many new homes on the market. “The homes that are on the market are Stay on the market longer And we’re seeing them start selling for less than list price,” Fairweather explained.

Source: Realtor.com data, Intel visualization

What this means is that inventories are not rising in response to new supply (albeit slowly), but in response to weak demand.

• “Mortgage rates have gone up, which has slowed demand and led to inventory building up,” Simonsen said. He said other factors holding back demand include fewer people moving for new jobs and fewer new hires. “When you look at the employment numbers, there aren’t a lot of layoffs, but there aren’t a lot of new hires either.”
• Optimal Blue Data show The average interest rate on a 30-year fixed-rate mortgage peaked last fall at just under $1,000. 8 percentbut then fell to a high 6 percent Range — a figure that accounts for both a slight increase in new listings and weak demand. Because loans remain too expensive for many consumers, homes are sitting on the market and inventory is rising.
• In addition to all this, while inventory may be increasing, there were still about 10,000 active listings in June, according to data from Realtor.com. 23 percent That’s lower than the average June for 2017-2019, just before the pandemic hit, so housing supply remains tight by historical standards.

What’s emerging is that while inventory may be improving and buyers are having an easier time finding the homes they love, high costs still make it difficult for them to afford them.

The situation is in stark contrast to the pandemic year, when inventory was also an issue because demand was high and outpaced growing supply.

So what are agents and brokers doing about all this?

Respondents to the Inman Intel Index survey, conducted in June, are feeling the effects of a market that continues to struggle to balance supply and demand.

• Among the agents who responded to the survey: 27 percent He said the pipeline is “significantly lighter” than it was a year ago. 30 percent Although they described the pipeline as simply “lightening,” this means that more than half of agents have experienced a weakening of their pipeline in the past year.
• In total, 24 percent Fifty percent of agent respondents cited a lack of inventory as their biggest concern right now. This was the second biggest concern among agents, tied with commission compression. Mortgage interest rates, which are strongly tied to inventory, were the most common top concern, 29 percent The agent response.
• Of the brokers who participated in the survey, approximately 19 percent Companies cited inventory as their biggest concern, second only to fee litigation. 25 percent.
• Similarly, of the more than 6,000 Realtors surveyed in last week’s NAR 2024 Member Profile, 26 percent The company pointed to inventory as one of the two biggest issues holding customers back: Only affordability, which, like rates, has a lot to do with availability, ranked higher as a customer hurdle.

The bottom line is that agents are feeling the challenges of the current market — high rates, low demand and still-low inventory — and the survey found that the most common response is for agents to focus on their own territories.

• More than a quarter of agents who responded to the survey, or 28 percentsaid that “almost all” of their recent listings were from repeat customers, outperforming all other responses to the question.
• another 15 percent Over 75% of their listings are from repeat customers. 23 percent They found that half to three-quarters of their listings were from repeat customers. Nearly two-thirds More than half of agents acquire properties from repeat clients.
• When we asked brokers what their agents should do to find new properties, the majority of respondents said 28 percentThey selected “other” and provided open-ended responses, many of which focused on sphere construction.
  • “Maintaining contact with past customers”
  • “Appealing to the public about existing housing assets.”
  • “Introduce and repeat”
• A significant percentage of broker respondents also said that agents should focus on social media and SEO. 25 percentDirect mail 18 percent.

The conclusion that emerges is that in a market that remains weak, real estate agents and brokers view their existing contacts of industry experts as a better resource than open houses, paid advertising, lead buying and other activities (activities that were underreported in the survey).

The survey also offers a ray of hope, which may be a response to the figures at the top of this article that show inventories, at least, are improving.

• If there are multiple agents who responded to the survey, or 43 percentsaid it believes its listing pipeline will be roughly the same a year from now compared to today.
• another 35 percent We expect there will be more listings in the pipeline over the next year. 22 percent We think the pipeline will be lighter.
• That is, agents believe that the future will be at least as good as the present, and many believe it will be even better.

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