#United States #Austin #U.S. Housing #Realtor #Buyer's Market

Analyzing the U.S. Housing Market's Shift to Buyer's Territory

The real estate landscape in the United States is undergoing a notable transformation, particularly illustrated by a recent report from Realtor.com® that highlights a significant shift towards a buyer's market across several major metropolitan areas. This shift, marked by seven of the fifty largest U.S. metros now falling into buyer's territory, raises important questions about pricing, buyer preference, and market dynamics.

Understanding the Current State of the Market

According to the August report, the national housing market has reached a rare state of balance, with the months of supply leveling at 5.0—a figure that hasn't been recorded in the summer months since Realtor.com began its assessments in 2016. This balance, however, conceals a complex regional landscape where local market conditions vary drastically.

Danielle Hale, Chief Economist at Realtor.com, emphasized that while the national picture gives a balanced view, the real action occurs at the local level. For instance, metros such as Miami, Austin, and Orlando have successfully swung the momentum in favor of buyers. Conversely, cities like Milwaukee and Boston still uphold a seller's market vibe, where sellers find themselves with the upper hand.

This divergence hints that both buyers and sellers need to be attuned to their local markets, as decisions made based solely on national trends may be misleading. The current supply of homes—a metric defined as the total inventory divided by monthly sales—suggests that a seller's market is indicated when supply falls below four months, while a balanced market is categorized between four to six months.

The Seven Buyer's Markets Revealed

In the current housing environment, the identified seven metropolitan areas in buyer's market territory include:

• - Miami (with a staggering 9.7 months of supply)
• - Austin (not far behind at 7.1 months)
• - Orlando (6.9 months)
• - New York City (6.7 months)
• - Jacksonville (6.3 months)
• - Tampa (6.3 months)
• - Riverside, California (6.1 months)

Each of these markets shares the characteristic of witnessed price declines on a per-square-foot basis, illustrating the prevailing conditions favoring buyers. The report suggests that as inventories swell in these areas, buyers stand in a more advantageous position—in contrast to tighter markets in parts of the Northeast and Midwest.

Inventory Growth and Regional Differences

Despite the favorable position buyers find themselves in, the housing inventory still lags behind pre-pandemic norms, with national averages sitting about 14.3% lower than the figures observed between 2017-2019. However, there’s a positive trend that can’t be overlooked: active listings have surged 20.9% year-over-year in August, marking a sustained growth pattern over the past 22 months.

This growth, while promising, has shown signs of deceleration since May. In particular, western regions (like the West and South) recorded the strongest surges in inventory, while the Midwest and Northeast lag behind with less significant growth.

Delistings and Market Frustration

A recent surge in delistings—homes being removed from the market—reveals another challenge for sellers. Up 57% year-over-year in July, this metric indicates rising frustration among sellers unwilling to compromise on pricing. The increasing delisting-to-listing ratio, now standing at 0.24, further underscores this trend, highlighting that sellers are becoming more selective.

A notable spotlight shines on regions like Miami and Phoenix, where high ratios of delistings to new listings are evident, indicating a tightening market for potential buyers.

What Lies Ahead?

As demand softens with pending home sales down by 1.3% year-over-year in August, and the average home taking longer to sell—60 days on the market—the landscape might suggest a more prolonged cooling phase ahead. Notably, twenty-seven out of the fifty largest metros now exhibit longer listing times compared to pre-pandemic averages, with cities like Nashville and Miami experiencing substantial slowdowns.

Conclusion

In conclusion, understanding local market dynamics in the U.S. housing sector is crucial for both buyers and sellers. As dynamics shift towards a buyer's market in key areas, it serves as a reminder that individual markets may present vastly different conditions and narratives than the national trends suggest. With fluctuating inventories and emerging challenges in pricing and negotiations, the market remains an evolving landscape for all parties involved.