The September Housing report saw significant developments, particularly in terms of increased inventory and changes in buyer and seller behavior, as detailed by recent Realtor.com® data. Here’s a comprehensive summary of the key trends and statistics shaping the market. You can read the full report here.

Elevated Inventory and Rising Seller Activity

The number of homes actively for sale increased by 34% compared to the previous year, marking the 11th consecutive month of annual inventory growth. This rise in available homes is the highest since April 2020. Sellers have responded to this changing environment with increased listing activity, up by 11.6% year-over-year, which represents the most substantial growth in new listings in three years. This surge is partly fueled by a sharp decline in mortgage rates following the Federal Reserve’s 50 basis point rate cut.

Interestingly, inventory growth is highly correlated with falling mortgage rates, which have significantly reduced the “lock-in effect” that had previously restricted homeowners from selling due to being locked into low mortgage rates. This phenomenon is particularly pronounced in high-cost markets, where buyers and sellers experience larger nominal savings from lower rates.

For example, in markets like Seattle, Washington, D.C., and San Jose, homebuyers can now save between $392 and $935 on their monthly mortgage payments, compared to savings of just $212 to $271 in lower-cost markets like New Orleans, San Antonio, and Tampa.

Market Speed and Home Prices

Despite the growing inventory, the speed of the housing market has slowed. Homes are spending more time on the market—an average of 55 days, which is seven days longer than the same period last year. This represents the slowest September in five years. The share of listings with price cuts also increased slightly to 18.6%.

However, while the overall median price of homes fell by 1.0% to $425,000, the median price per square foot increased by 2.3%. This suggests that more smaller, affordable homes are being listed, contributing to the decline in the overall median price but reflecting rising demand for these more budget-friendly options.

Regional Inventory and Listing Trends

All regions of the U.S. saw year-over-year inventory growth in September, with the South and West seeing the largest increases at 42.0% and 36.5%, respectively. The Northeast and Midwest saw more modest gains, at 14.8% and 22.3%, respectively.

Compared to pre-pandemic levels (2017-2019), the South showed the smallest inventory gap, down just 8.4%, while the Midwest and Northeast still lag significantly, with gaps of 42.1% and 50.9%. This trend suggests that while inventory is rebounding, the South and West are leading the recovery.

In terms of newly listed homes, the Northeast saw the largest year-over-year increase at 15.6%, followed by the West (13.4%), the South (8.3%), and the Midwest (6.1%). Notably, a correlation was found between the median price of homes and the growth in newly listed homes. Higher-priced markets saw greater increases in new listings, reflecting the more significant financial benefits of falling mortgage rates in these areas.

Pending Sales and Impact of Falling Mortgage Rates

Pending home sales, or homes that are under contract but not yet sold, increased by 3.5% compared to last year, a notable rebound from August’s modest 0.3% gain. Falling mortgage rates have likely brought sidelined buyers back into the market, boosting both demand and the number of homes under contract.

The rebound in pending listings comes after several months of slow growth in home-buying activity, suggesting that as mortgage rates remain low, more buyers are expected to enter the market. The combination of increased inventory and reduced rates is providing both more options and improved affordability for buyers.

Regional Market Trends in Days on Market

Across the U.S., homes are spending more time on the market than last year but generally less time compared to pre-pandemic levels. In the South, where inventory growth has been the strongest, homes spent 11 more days on the market compared to last year. The West saw homes staying on the market for seven more days, while the Midwest experienced just a two-day increase. Interestingly, homes in the Northeast stayed on the market for the same amount of time as last year, highlighting regional differences in market dynamics.

Among the 50 largest metro areas, Tampa, Rochester, and Phoenix saw the most significant increases in time on the market, with homes in Tampa spending 22 additional days on the market compared to last year.

Changes in Home Prices and Price Reductions

Nationally, the median list price in September decreased by 1% compared to last year, falling to $425,000. However, when controlling for home size, the price per square foot grew by 2.3%. This divergence suggests that while home prices have decreased, the average size of homes listed for sale has also dropped, leading to higher per-square-foot prices.

Across different regions, listing prices showed mixed trends. The Northeast and Midwest saw modest year-over-year price increases of 2.8% and 0.6%, respectively, while prices declined slightly in the West (-0.2%) and South (-2.3%). When considering price per square foot, all regions posted stronger gains, with the Northeast leading at 4.1% and the South trailing at 1.3%.

Among the 50 largest metros, Rochester, Milwaukee, and Cleveland saw the biggest jumps in median list prices, with increases of 13.0%, 11.4%, and 9.3%, respectively. In contrast, San Francisco, New Orleans, and Birmingham saw the smallest price-per-square-foot gains since the pandemic.

Conclusion: Market Outlook and Future Trends

The housing market in September 2024 reflects the ongoing recalibration of inventory levels, listing activity, and buyer behavior in response to fluctuating mortgage rates. While inventory continues to recover and homes are spending more time on the market, price trends remain relatively stable, with higher-cost markets seeing more significant price growth compared to less expensive areas.

Mortgage rates have been the key driver of recent market shifts, alleviating the rate-lock effect that had constrained both buyers and sellers in recent years. As rates remain low, more homes are expected to enter the market, and sidelined buyers are likely to return, potentially boosting homebuying activity in the coming months.

Despite some regional disparities, the broader market trends point to a gradual recovery in inventory levels, increased listing activity, and steady, albeit slow, demand growth. Looking ahead, buyers and sellers should be prepared for a market that continues to be shaped by mortgage rate fluctuations, regional variations in inventory, and evolving affordability concerns.