8 states are back above pre-pandemic housing inventory levels—these 3 states are likely next

When assessing home price momentum, ResiClub believes it's important to monitor active listings and months of supply. If active listings start to rapidly increase as homes remain on the market for longer periods, it may indicate potential future pricing weakness. Conversely, a rapid decline in active listings could suggest a market that is heating up.

Generally speaking, local housing markets where active inventory has returned to pre-pandemic levels have experienced softer home price growth (or outright price declines) over the past 24 months. Conversely, local housing markets where active inventory remains far below pre-pandemic levels have, generally speaking, experienced stronger home price growth over the past 24 months.

National active listings are on the rise (+29% between October 2023 and October 2024). This indicates that homebuyers have gained some leverage in many parts of the country over the past year, with some markets even feeling like buyers' markets on the ground.

However, nationally, we’re still below pre-pandemic active inventory levels (-21% below October 2019), and some resale markets still remain tight-ish.

October inventory/active listings* total, according to Realtor.com:

October 2017: 1,287,322 📉

October 2018: 1,304,682  📈

October 2019: 1,208,311 📉

October 2020: 734,040 📉 (overheating during the Pandemic Housing Boom)

October 2021: 565,707 📉 (overheating during the Pandemic Housing Boom)

October 2022: 752,741 📈 (mortgage rate shock starts)

October 2023: 738,082 📉

October 2024: 953,814 📈

IF we maintain the current year-over-year pace of inventory growth (+215,732 homes for sale), we'd have...

1,169,546 active inventory come October 2025

1,385,278 active inventory come October 2026

Click here to view an interactive version of the map below

Among the biggest inventory jumps: Florida.

In Florida, the biggest inventory increases initially over the past two years were concentrated in sections of Southwest Florida. In particular, in markets like Cape Coral, Punta Gorda, and Fort Myers, which were hard-hit by Hurricane Ian in September 2022. This combination of increased housing supply for sale—the damaged homes coming up for sale—coupled with strained demand—the result of spiked home prices, spiked mortgage rates, higher insurance premiums, and higher HOAs—translated into market softening across much of Southwest Florida.

However, the inventory increases in Florida now expands far beyond SWFL. Markets like Jacksonville and Orlando are also above pre-pandemic levels, as are many coastal pockets along Florida’s Atlantic Ocean side.

One reason being that Florida’s condo market is dealing with the after effects of regulation passed following the Surfside condo collapse in 2021. This is compounded by a slowdown in work-from-home migration to Florida and significant home insurance shocks.

Click here to view an interactive version of the map below

In August 2024, only four states had returned to or surpassed pre-pandemic 2019 active inventory levels. In September 2024, it grew to seven states.

In October 2024, that number grew again to eight states. Arizona, Colorado, Florida, Idaho, Oklahoma, Tennessee, Texas, and Utah.

States likely to join that list soon include Alabama, Oregon, and Washington.

Click here to view an interactive of the chart below (best done on desktop)

Why are Sun Belt and Mountain West markets seeing a faster return to pre-pandemic inventory levels than many Midwest and Northeast markets?

One factor is that some pockets of the Sun Belt and Mountain West experienced even greater home price growth during the Pandemic Housing Boom, which stretched fundamentals too far beyond local incomes. Once pandemic-fueled migration slowed, and rates spiked, it became an issue in places like Colorado Springs and Austin.

Unlike many Sun Belt housing markets, many Northeast and Midwest markets have lower levels of homebuilding. As new supply becomes available in Southwest and Southeast markets, and builders use affordability adjustments like buydowns to move it, it has created a cooling effect in the resale market. The Northeast and Midwest don’t have that same level of new supply, so resale/existing homes are pretty much the only game in town.

Big picture: This year we’ve observed a softening across many housing markets as strained affordability tempers the fervor of a market that was unsustainably hot during the Pandemic Housing Boom. While home prices are falling in some areas around the Gulf, most regional housing markets are still seeing positive year-over-year home price growth. The big question going forward is whether active inventory and months of supply will continue to rise and cause more housing markets to see outright price declines?

All the charts above show active listings*, or everything currently for sale. Actives are rising year-over-year because demand has cooled and homes are taking longer to sell—not because there’s a surge in new listings.

In fact, here’s a look at the national chart for new listings**, which remain suppressed due to the lock-in effect that continues to constrain resale turnover. Many homeowners who would otherwise like to sell and buy something else are still opting to stay put to avoid losing their lower mortgage rate/monthly payment.

* Active listings (i.e. what ResiClub often calls “inventory”) = “The count of active listings within the specified geography during the specified month. The active listing count tracks the number of for sale properties on the market, excluding pending listings where a pending status is available. This is a snapshot measure of how many active listings can be expected on any given day of the specified month” according to Realtor.com.

** New listings = “The count of new listings added to the market within the specified geography. The new listing count represents a typical week’s worth of new listings in a given month. The new listing count can be multiplied by the number of weeks in a month to produce a monthly new listing count” according to Realtor.com.

7.09% —> Today’s average 30-year fixed mortgage rate as calculated by Mortgage News Daily

Range this year: 6.11% (lowest reading) ←→ 7.52% (highest reading)

280 bps —> Today’s “spread” between the 10-year Treasury yield and the 30-year fixed mortgage rate

The rate borrowers may qualify for (if eligible) can vary greatly from the daily average published by Mortgage News Daily. Many factors, including credit score, can affect this. ResiClub uses this “average” as a proxy for how the mortgage market is shifting—and how quickly.

Over the past week, ResiClub PRO members got these 3 additional research articles:

Updated home price analysis spanning over 800 metros and 3,000 counties

The housing market's home insurance shock, as told by one map

40-year change in statewide home prices

On Friday, November 8th, in New York City, ResiClub will host ResiDay, bringing together the brightest minds in the housing market. This will be our first-ever one-day conference.

There will be hundreds of influential housing investors, agents, developers, VCs, lenders, and brokers who are shaping the future of residential real estate, homebuilding, mortgage lending, and build-to-rent at ResiDay. Several prominent business and real estate journalists will also be there.

The ResiClub team will lead a day of insightful discussions on housing market trends and strategies impacting the future of the U.S. housing landscape. ​Expect top-tier speakers, ample networking opportunities, and hours of engaging discussions on the future of the U.S. housing market.

[ResiClub PRO members, our paid tier, can attend ResiDay for free]

If you have any questions about the event, or are interested in sponsorship opportunities, email [email protected]