U.S. housing market is heating up this summer, despite high interest rates

Active inventory — the number of homes are on the market across the U.S. — fell by 6.4% year-over-year in July. New home listings — which refer to homes appearing on the market for the first time — fell by 21% from the same period last year.

“Summer tends to bring ample buyer demand as well as growing home supply as households look to make big changes between school terms,” Hannah Jones, economic data analyst at Realtor.com, told MarketWatch.

But buyer demand has been lower this summer compared to previous years, and supply has not been plentiful. “Limited housing supply means that even with fewer buyers looking, many areas are seeing fierce competition for homes,” Jones added.

(Realtor.com is operated by News Corp.
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 subsidiary Move Inc. MarketWatch is a unit of Dow Jones, also a subsidiary of News Corp.).

A long, hot summer of low inventory

“Inventory is incredibly low this summer,” Jeff Tucker, senior economist at Zillow
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told MarketWatch.

Approximately 4 out of 10 homes were sold above the list price, as of the middle of June, the company said. In 2018, less than one-third of home sales were sold for over the list price.

People who thought that the pendulum was swinging in the other direction — and that the market is cooling down — will likely find those figures surprising, Tucker said. “That did not come to pass.”

Where is housing inventory getting worse?

In July, inventory fell the sharpest in Stockton, Calif. (down 56%), followed by the Bay Area (down 52%), and the San Diego-Chula Vista-Carlsbad metro area (down 46%), Realtor.com said. The median price of homes in Stockton are $449,000. In the Bay Area, the median price is $1.5 million, and nearly $500,000 in San Diego.

Inventory fell 29% in July in Oshkosh-Neenah, Wis., and by 26% in Lancaster, Penn. The median price of a home in Oshkosh, Wis. is $260,000, and $320,000 in Lancaster.

The post-pandemic return to the office has also had an impact on the number of properties available for sale. In New York City, housing inventory has fallen considerably in specific parts of the Bronx and Brooklyn. For instance, in the zip code 11206, more commonly known as Williamsburg, the number of active listings has fallen by nearly 39% from last July. Brownsville in Brooklyn ranked second, with a 10% drop in inventory. Bathgate in the Bronx ranked third.

Where is housing inventory getting better?

The Sun Belt offered an increasingly high number of homes for sale in July, Realtor.com said.

Housing inventory was highest in July in the Crestview-Fort Walton Beach-Destin metro area, where listings grew by 21% year-over-year, followed by Punta Gorda (up 72%) and Panama City (up 15%). All of these metro areas are in Florida.

Other areas saw a big jump in listings. Killeen-Temple in Texas saw the biggest growth in home listings over the last year (79%), Realtor.com said, followed by the Houma-Thibodaux, La. metro area (up 76%), and Punta Gorda, Fla. (up 72%).

But further out of major metropolitan areas, listing growth remains strong: Active listings grew 26% in Water Mill, Long Island, N.Y., they grew 13% in Alpine, Bergen County, N.J., and rose by 6.3% in Westhampton Beach in Long Island.

Supply is a more complicated story out West

Out West, the story played out a little differently: Home inventory is growing slowly in Los Angeles, a major city center for entertainment and the arts. Inventory rose by just 2.1% in July in Century City, Realtor.com data showed.

Malibu and Newport Beach also saw listings grow. In fact, housing inventory on Newport Beach grew by 125% in July and by 45% in Malibu. 

Comparatively inventory is lowest in the following California metro areas: Bellflower metro area, where home listings fell 48% in July, Westminster, where listings fell 65%, and South Gate, where listings fell 14%.