Home Prices Up (Again) While Inventory Shrinks (Again)

Home prices rose on an annual basis for the second consecutive month in September while the housing inventory shrank year-over-year for a third consecutive month, according to new data from Realtor.com.

September’s median list price of $430,000 was down slightly from August, but it was also up 0.4% from September 2022. All regions saw active listing prices in larger metros increase on average, with Northeastern metros recording the highest annual growth rate at 10%. The greatest year-over-year metro price hikes occurred in Los Angeles (+23.8%), San Diego (+18.2%), and Richmond, Virginia (+15%).

The rising prices occurred while the number of homes on the market declined by 4% from one year earlier. Active inventory remained 45.1% below pre–pandemic (2017-2019) levels, although the number of homes for sale increased month-over-month by 4.9%, which was attributed to an anomalous bump in new listings during August. Pending listings fell -12.2% from the same time last year, more than August’s -11.5% decline, due in part to higher mortgage rates in July and August. Newly listed homes fell -9.1% compared to September last year, more than August’s -7.5% year-over-year drop.

“An uptick in homes with reduced prices is a small break for buyers on top of the usual seasonal factors that align to make this first week in October the best week to buy,” said Danielle Hale, chief economist at Realtor.com. “Yet, the larger context remains challenging. Buyers still struggle with the triple threat of rising listing prices, record-high mortgage rates, and limited inventory, making affordability a continued concern. The number of homes for sale is likely to remain low as higher mortgage rates leave many homeowners feeling ‘locked in’ to their current rates. Data shows low inventory is pushing many homebuyers toward new homes, but the growth in new construction isn’t enough to sufficiently narrow the inventory gap.”