Rising housing inventory levels in 2024 may not be the positive sign of market health that they appear to be. High inventory levels contribute to another problem as active listings are remaining unsold for longer periods. Although higher home prices, rising mortgage rates and other expenses are obvious factors, there may be more to the story.
Rising supply is one of the housing market highlights of 2024, according to HousingWire Lead Analyst Logan Mohtashami, who said that housing inventory is approaching levels seen in 2019 before the COVID-19 pandemic. More inventory should be a sign of the market’s return to normalcy, according to Mohtashami, as the market enters 2025 with 27% more inventory compared to early 2024.
But Redfin‘s unsold inventory report for November, released on Monday, adds a layer of concern to rising inventory. The report focuses on homes that were on the market for at least 60 days at end of the month. Redfin refers to these listings as “stale inventory.”
According to the report, 54.5% of November home listings remained unsold for at least 60 days. That share is 460 basis points higher than a year ago, and it’s the highest share since November 2019. The homes that went under contract took 43 days to do so — the slowest pace since 2019.
Texas and Florida — two states that experienced significant listings growth in 2024 — had the highest shares of stale inventory. Miami had the highest percentage (63.8%) among the 50 largest U.S. metro areas. Austin (62.4%), Fort Lauderdale (62.3%), San Antonio (60.3%) and Orlando (59.9%) rounded out the most stagnant metro areas.
Some agents attribute stale inventory growth to unreasonable prices that repel would-be buyers from pursuing certain listings.
“A lot of listings on the market are either stale or uninhabitable,” Redfin Premier agent Meme Loggins said in a statement. “I explain to sellers that their house will sit on the market if it’s not fairly priced. Homes that are priced well and in good condition are flying off the market in three to five days, but homes that are overpriced can sit for over three months.”
In tandem with Loggins’ remarks, a separate Redfin renter tenure report released Monday suggests that for-sale supply is growing in part because renters are moving less frequently.
According to Redfin, 33.6% of U.S. renters are staying in their rental homes for at least five years. Ten years ago, that share sat at 28.4%. Roughly one in six renters stayed put for 10 or more years. Simply put, some renters are choosing to avoid rising homeownership costs, moving expenses and brokerage fees, Redfin explained.
In November, Redfin also reported that renter household growth is significantly outpacing that of homeowners, showcasing a shift in market dynamics.
“Rents spiked during the pandemic, but have stayed relatively flat over the past two years as home prices and mortgage rates continued to climb. That has encouraged renters to stay in the same home, where they are less likely to face major rent increases,” Redfin senior economist Sheharyar Bokhari said in a statement. As newly built apartments arrive on the market, rent prices could decline and establish 2025 as a renters’ market.
There is some hope for potential buyers and sellers if mortgage rates decline. HousingWire predicts an easing of mortgage rates to levels between 5.75% and 7.25%. Home sales may also ramp up as the lock-in effect loosens its grip on homeowners. But home-price appreciation is unlikely to waver in 2025, so inventory could remain stagnant.
