Home inventory numbers recently reached the largest year-over-year increase recorded in the past five years, with data suggesting that more increases are to come.
The inventory of homes for sale during the week ending May 21 was 9% higher compared to the same week last year, according to Realtor.com.
This was the biggest yearly increase the site had on record since it started tracking inventory in 2017.
It also marked the second straight week of inventory growth. Experts say the boost in inventory is a result of more new listings and fewer home sales.
Realtor.com’s data showed the number of homes to hit the market was 6.6% higher last week than the same time a year ago. But according to the National Association of Realtors, 6% fewer homes sold in April than in April 2021.
Experts say rising mortgage rates have been the biggest contributing factor in the start of the housing market’s cooldown.
In May, rates reached their highest levels since 2009.
Some are calling this cooldown a warning, and the start of an inevitable recession. Others are calling it a natural cooling after months of scorching sales and competition.
Market experts suggest buyers take a wait-and-see approach as they navigate the changes to come.
Rather than jumping at every sign of improvement, it can be helpful to see how buying conditions look in another month or two as conditions continue to become more favorable for buyers.
According to Altos Research, unsold single-family home inventory is rising on a year-over-year basis, despite still being far below pre-pandemic levels.
Homebuilders also are reporting stronger earnings, and demand levels that are fluctuating similarly to how they were pre-pandemic.
Market experts predict that inventory will continue to grow in the coming weeks and months.
The percentage of sellers that are cutting sales prices is still below average, but also rising steadily.
Experts also are reminding borrowers that while mortgage rates have been on the rise, they still remain historically favorable.
All of these signs point to better options for potential buyers, experts say. They suggest homeowner hopefuls connect with a trusted local mortgage lender to apply for pre-approval.
Getting pre-approved for a loan as soon as possible helps borrowers understand their loan options and what they can afford.
If data is showing continued improvements in supply and falling home prices, buyers can keep an eye out on their local market of choice for the right home to come on the market, mortgage experts say.
Since they are already pre-approved, it will make the home buying process much quicker and smoother once they find their dream home.