Home Listings Rise in June While Prices Begin to Drop, Demand Reaching ‘Breaking Point’

A "for sale" sign is seen near houses in Arlington, Va., on May 6, 2020. (Andrew Caballero-Reynolds/AFP via Getty Images)

The U.S. housing market seems to be cooling off as the tight inventory situation shows signs of reversal, according to data from real estate listings website Realtor.

In June, the number of real estate listings increased by 18.7 percent compared to the same time in 2021, according to a June 30 news release by the company. This is the second-straight month of growth as well as the fastest increase since July 2017. The surge in listings means that there are over 98,000 more homes for sale every day compared to the same period in 2021.

“The increase in the number of homes for sale in June is due to a couple of key factors: Namely, sellers are putting more homes up for sale than last year. In fact, we’re back to about as many sellers as we saw in a typical pre-pandemic market,” said Realtor.com chief economist Danielle Hale. Supply of homes for sale is picking up just as demand is reaching a “breaking point” for many buyers, she added.

In Austin, which was one of the red hot markets during the early pandemic period, active listings rose by 144.5 percent in June compared to 2021. In cities like Raleigh, North Carolina, and Phoenix, Arizona, inventory listings have surged by over 100 percent during this period.

These markets are undergoing “rapid adjustments,” Hale said, while adding that sellers in these areas are jumping into the market while buyers are getting more selective. For those who are looking to purchase a home, the rise in inventory is good news despite the fact that finding an affordable home might still be challenging.

Home Prices and Mortgage Rates

The median home price in June hit a record high of $450,000. This is up 16.9 percent from June 2021 and 31.4 percent from June 2020.

In addition to sky-high prices, buyers are also struggling with surging mortgage rates that are currently at about 5.8 percent. The cost of financing 80 percent of a typical home rose to 57.6 in June compared to the same time in 2021. This amounts to $765 per month in extra mortgage payments.

A recent report by real estate brokerage firm Redfin found that more than 40 percent of homes in multiple local markets in the United States saw prices decline in May. In Utah, 47.8 percent of homes for sale saw prices go down, the highest among the 108 metropolitan divisions analyzed by the firm.

According to a June 30 update from Freddie Mac, the rapid rise in mortgage rates has paused. This should help the housing market adjust to a “more normal pace” of home price growth.