Florida and Idaho join Texas in hitting pre-pandemic inventory milestone—see which states aren't too far behind

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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, housing markets where active inventory has returned to pre-pandemic levels have experienced weaker home price growth over the past 24 months. Conversely, housing markets where active inventory remains far below pre-pandemic levels have, generally speaking, experienced stronger home price growth over the past 24 months.

We are starting to see national active listings rise (+36.7% between June 2023 and June 2024); however, we’re still well below pre-pandemic levels (-31.1% below June 2019).*

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

June 2017: 1,292,371 📉

June 2018: 1,216,504 📉

June 2019: 1,219,807 📈

June 2020: 871,557 📉 (overheating during the Pandemic Housing Boom)

June 2021: 492,425 📉 (overheating during the Pandemic Housing Boom)

June 2022: 573,650 📈 (mortgage rate shock starts)

June 2023: 614,326 📈

June 2024: 839,992 📈

IF we maintain the current year-over-year pace of inventory growth (+225,666 homes for sale), we'd have...

1,065,658 active inventory come June 2025

1,291,324 active inventory come June 2026

Click here to view an interactive version of the map below

The biggest inventory: Florida.

In Florida, the biggest inventory increase is concentrated in sections of Southwest Florida. In particular, in markets like Cape Coral and Fort Myers, which were hard-hit by Hurricane Ian in September 2022. This combination of increased housing supply for sale—the damaged homes—coupled with strained demand—the result of spiked home prices, spiked mortgage rates, higher insurance premiums, and higher HOAs—has translated into market softening across much of Southwest Florida. In addition, Florida’s coastal condo market is dealing with the after effects of regulation passed following the Surfside condo collapse in 2021.

Click here to view an interactive version of the map below

At the end of June, three states had returned to pre-pandemic 2019 inventory levels: Texas (which first did so in May), Florida, and Idaho. Not too far behind are Tennessee, Colorado, Washington, and Arizona.

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

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 remain the only game in town.

Big picture: We're observing a softening across many housing markets as higher mortgage rates temper 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 home price growth. The big question going forward is if active inventory and months of supply continue to rise, will more housing markets see outright price declines?

* 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.

Later this week, ResiClub PRO members will get a deeper dive looking at inventory changes for over 800 metro areas and 3,000 counties.

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Nothing in this newsletter is financial advice. Please do your own research.