The real estate market is awash with inventory worth nearly $700 billion.
According to REDFIN News, a swelling number of properties languishing on the market highlights a distinct shift in the U.S. housing landscape, with $330 billion worth of homes failing to pique buyer interest after 60 days listed.
This unprecedented surplus, calculated by real estate platform Redfin, no doubt heralds a drop in home-sale prices as the year progresses. Experts anticipate a reduction by up to 1% by year's end.
According to Redfin, April's data showed the total market value of home listings surging by 20.3% compared to last year, reaching an all-time high of $698 billion. The previous highest was just under $550 billion.
Such a stark increase reveals more sellers than ever are attempting to capitalize on their real estate before potential market downturns driven by economic uncertainties. The term "stale inventory" is designated for properties unsold after 60 days, and as of April, these accounted for nearly half of the total market value.
"A huge pop of listings hit the market at the start of spring, and there weren’t enough buyers to go around," said Matt Purdy, a Denver-based Redfin Premier agent.
As the balance of power swings decidedly toward purchasers, sellers are increasingly willing to negotiate, leading to an elevated number of homes on the market for extended periods. Disinterest is especially marked this year, with 44% of April's listings sitting unsold past the 60-day mark. This is an uptick from last year's 42.1%, signaling a continued rise in buyer reluctance or financial caution.
In a present-day landscape marked by economic instability and high living costs, fewer individuals are buying homes. Consequently, homes now remain on the market for an average of 40 days before going under contract, an increase of five days from the previous year.
The convergence of rising home values — up 1.4% since last April — against a backdrop of spiraling monthly costs has created a precarious balance for the market. The volume of homes for sale surged by 8.6% this April compared to the prior month, further exacerbating the mismatch between supply and demand.
Chen Zhao, Redfin’s head of economics research, elaborated on the situation, explaining, "The record-high dollar value of all homes listed for sale quantifies this buyer's market." With almost half a million more sellers than buyers as current stakeholders, the supply overshoot is stark. Zhao suggests that while the current surplus pushes prices down, increasing incomes might buffer some of the blow for prospective buyers.
Seasonal trends further affect the volume and value of stale inventory, which is typically higher in spring and summer, lower in winter. Therefore, today’s market conditions might shift as the year unfolds.
Reflecting on recent history, January 2022 saw total listing values at a record low of $309 billion, underscoring the dramatic swell to today's $698 billion.
As sellers adjust to this new economic climate, the market could see further fluctuations, which might either challenge or benefit different stakeholders depending on their positions and readiness to adapt.
The potential decline in home prices toward the end of 2025 signifies a crucial adjustment period for the U.S. housing market, positioning buyers to possibly leverage their purchasing power more than they’ve been able to in years.