July housing trends show some good news for first time buyers. New listings grew on a yearly basis for the fourth month in a row as sellers added a higher number of smaller homes to the market, according to the Realtor.com® Monthly Housing Report. Growth in the U.S. median listing price continued to moderate last month, but data shows some of this trend can be attributed to the increase in lower-priced homes for sale.
Nationally, the number of homes for sale declined 33.5% year-over-year in July. While inventory is still lower compared to last year, the rate of decline is improving, especially at more affordable price points. If this trend continues, there could be some relief on the horizon for first time buyers looking for smaller homes.
“July housing trends show a market still working its way back toward some version of normal. The feverish pace of home sales is beginning to follow historical seasonal patterns, while new listings grew at an unusually high rate for the summer months, further helping the inventory crunch,” said Realtor.com® Chief Economist Danielle Hale. “This is shifting the housing market balance in a more buyer-friendly direction, but buyers may not see as much price moderation as suggested by the national trend because it’s partly attributed to a shift toward smaller homes for sale. Still, if these changing inventory dynamics continue, we could see a wave of real estate activity heading into the latter part of the year.”
Summer surge in new listings continues; inventory declines improve across the board
Although new listings growth is still below typical 2017-2019 levels (-9.5%), more new sellers entered the market in July (+6.5% year-over-year), which was higher than June’s 5.5% increase year-over-year. Newly listed homes typically decline from June to July, but this year they held steady at -0.6% over June.
These newly listed homes tend to be smaller in size than last year, which has shifted the mix of available inventory. Looking at the single family home category alone, the share of homes having between 750 and 1,750 square feet increased from 30.2% in July 2020 to 36.3% in July 2021, while the inventory of homes having between 3,000 and 6,000 square feet decreased from 24.2% to 20.1%.
Locally, new listings grew 11.1% year-over-year in the nation’s 50 largest metros, with more than half posting double-digit gains, led by a mix of cities across the country: Columbus, Ohio (+42.9%), Baltimore (+36.9%), Cleveland, Ohio (+35.8%), Milwaukee, Wis. (+34.3%) and Richmond, Va. (+30.1%). The biggest regional new listings increases were in the Midwest, up 19.8%, and West, up 11.3%.
U.S. home price gains moderate due to more affordable homes being listed
In July, the U.S. median list price held steady at last month’s record-high of $385,000, up 10.3% year-over-year. However, prices are slightly moderating from the June growth rate of +12.7% as more affordable homes were being listed this July compared to last year. Looking at trends for a benchmark, 2,000 square-foot single-family home, we see that price growth in July continued at a brisk pace, with prices up 18.6% year-over-year.
The largest U.S. metros saw the third straight month of single-digit listing price growth in July, at an increase of 3.9% over last year. Additionally, 22 of the 50 biggest markets saw lower median listing prices in July compared to last year, but this can be attributed to an increase in smaller, more affordable inventory. Regionally, the West posted the biggest yearly price gain (+9.7%), with the highest big metro increases seen in Austin (+36.6%), Las Vegas (+20.6%) and Riverside (+20.0%).
Feverish pace of home sales begins to see more typical summer seasonality
The typical U.S. home spent 38 days on the market in July, 22 days faster than last year and 23 days faster than the 2017-2019 July average, a more normal pre-Covid housing market. In a sign of a return to typical seasonality, however, this was one day slower than the record 37 day time on market in June. Four metros tied for the fastest time on market in July, at a median 17 days: Columbus, Denver, Nashville and Rochester, N.Y.
Homes sold even faster compared to last year in many of the 50 largest U.S. metros, which saw time on market decline by an average 17 days year-over-year in July, with the steepest regional drop in the South (-22 days). Additionally, the three metros where homes sold fastest in July compared to last year were all in the South: Miami, at a wide margin of 61 days faster, along with Raleigh (-33 days) and Jacksonville (-30 days).