For-sale inventory increases for first time in three years

Home listings increased for the first time since June 2019, according to Realtor.com data, suggesting the U.S. housing supply hit a turning point last month.

The number of active listings rose 8% year-over-year in May, probably driven by new sellers and a slowdown in would-be buyers deterred by high prices, Realtor.com said in a report Thursday. The largest increases in new listings were in the West and the South, in cities including Austin, Texas, and Phoenix, Arizona.

Still, the uptick in inventory doesn’t necessarily mean that the housing market exuberance is softening. Listings remain 48.5% below their May 2020 level, and price increases have accelerated in recent months.

“While this real estate refresh is welcome news in a still-undersupplied market, it has yet to make a dent in home price growth,” Danielle Hale, chief economist for Realtor.com, said in the report.

The U.S. median listing price rose to a record $447,000 in May, after just crossing the $400,000 threshold in March. And buyers made purchasing more quickly than in any month in Realtor.com data history going back to July 2016.

Nonetheless, the jump in mortgage rates and a softening economic outlook may have thinned out buyers and made bidding wars less exuberant. In an early sign, the rate of sellers making price cuts accelerated in May, Hale said.