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Are We Experiencing an Inventory Comeback in the Housing Market?

The U.S. real estate landscape is undergoing dynamic changes as we enter 2025. After several years of constrained housing supply, recent reports suggest that the inventory of homes on the market is starting to rebound in certain metropolitan areas. According to the Realtor.com® Monthly Housing Report, a total of 22 out of the 50 largest U.S. metropolitan areas now boast more active listings than were available prior to the pandemic, signaling a potential revival in the housing market.

A Closer Look at the Data

The cities that have seen the most remarkable recovery in housing inventory include Denver, Austin, and Seattle, each showcasing significant increases in active listings when compared to pre-pandemic levels. Denver leads the pack with a whopping 100% increase in available homes compared to the average from 2017 to 2019. Following closely are Austin with a 69% increase and Seattle with a 60.9% rise in inventory.

Ranking of Metros with the Highest Inventory Gains

1. Denver, Colorado: +100.0%
2. Austin, Texas: +69.0%
3. Seattle, Washington: +60.9%
4. Dallas-Fort Worth, Texas: +55.5%
5. San Antonio, Texas: +58.3%
6. San Francisco, California: +53.5%
7. Nashville, Tennessee: +44.4%
8. Orlando, Florida: +44.2%
9. Las Vegas, Nevada: +28.6%
10. Tucson, Arizona: +23.0%

This information highlights a trend where markets that prioritized housing construction during and after the pandemic are currently witnessing increased inventory levels. The correlation between building activity and inventory recovery is especially strong among cities like Austin and Nashville, where rapid construction has allowed for improved supply.

Understanding the Shift in Buyer Behavior

The dynamics of the housing market are also shifting as buyer behavior adjusts to the evolving landscape. Buyers are becoming more cautious and are taking longer to make decisions, which has resulted in homes remaining on the market for extended periods. In fact, in Nashville, the average time listings sit on the market has increased by 19 days compared to the previous year. Cities like Orlando and Miami are seeing similar trends, where homes are taking an average of 13 days longer to sell.

While these conditions indicate a cooling of buyer demand, it's important to note that the market is not yet classified as a buyer's market. With approximately 4.6 months of supply currently available, the market remains below the 6-month threshold that typically signals a buyer's market. Nonetheless, buyers now have more options, extended decision-making time, and greater negotiating power, which has led to a more balanced market poised to evolve further.

Navigating the Future of Real Estate

Despite these positive signs of recovery in certain regions, a nationwide shortfall of nearly 4 million homes persists due to chronic underbuilding. As such, while some metropolitan areas may tip into a more favorable market for buyers, others continue to grapple with low supply.

Danielle Hale, Chief Economist at Realtor.com®, notes the importance of fostering housing construction to meet the current demand. In times of fluctuating inventory levels, staying informed about local market trends is critical for both buyers and sellers looking to make informed decisions.

For a deeper dive into these metrics and to stay abreast of monthly housing trends, visit Realtor.com/research for detailed insights. Each month, new data is released to help elucidate the ongoing changes within the housing sector.

Conclusion

The current state of the housing market suggests a slow yet noticeable shift toward greater inventory and choices for potential buyers. As we navigate further into 2025, the challenge will remain to address housing shortages while promoting steady growth in urban areas. Understanding these patterns will be critical for anyone involved in the home buying or selling process in the coming months.