Real Estate News
ATTOM’s midyear review suggested rising inventory could cause home prices to flatten or fall later this year — and that would be good news for sales.
After years of rising home prices and slowing sales, the real estate market may shift in the second half of the year as pent-up demand overcomes some of the headwinds.
During ATTOM’s midyear review presentation last week, Altos Research Founder and President Mike Simonsen predicted that home sales will increase as prices flatten or fall in the coming months.
“That’s really because as inventory climbs, it’s allowing more sales to happen,” he explained. As competition picks up, Simonsen expects more sellers will be willing to offer discounts to get their homes sold.
This hasn’t occurred just yet. Existing home sales have lagged throughout the spring as economic uncertainty continues to weigh on buyers.
The trend Simonsen is anticipating did seem ready to materialize in previous years but was thwarted when mortgage rates began climbing. High rates will likely remain a big factor for home sales, but the expectation is that rates will slowly tick down later this year.
Why will the market shift? Housing inventory, which is finally back to pre-pandemic levels and is expected to keep climbing into the fall, will be the tipping point for the anticipated market change.
That rise in inventory is already having an impact on home prices. Simonsen noted that 11 states are at or below 2024 home prices, and in the Northeast, a region that has continued to see price increases due to a shortage of homes for sale, inventory is also starting to climb.
“We’re probably back to a supply that’s great enough for the story ‘sales are down, prices are up’ to invert for the rest of the year,” Simonsen said. Even so, he isn’t expecting any price drops to be significant unless mortgage rates spike as they did in the fall of 2022.
Homeowners are staying put longer: How long people stay in their homes is another trend worth watching. ATTOM data indicates the average homeowner keeps their home for 8.1 years before selling — the highest ever recorded for the data company’s homeownership tenure report, according to ATTOM Head of Data Science Aaron Wagner. The average homeownership tenure was 7.4 years just two years ago, while the average tenure was around four or five years a decade ago.
“This reflects a homeownership population that’s generally unwilling or unable or simply not confident enough to move in the current environment,” Wagner said. “It directly impacts inventory levels and market dynamics.”