The rising supply of homes for sale has yet to put a serious dent in affordability concerns, but it might be starting to.
That’s according to First American’s monthly Real House Price Index, which shows a national price decline of 1.3% from May to June. The index measures nominal home prices and adjusts them to account for changes in household income and interest rates. Real house prices increased 3.9% in June compared to a year ago, indicating that rising inventory still needs further saturation before making a meaningful dent in affordability.
“While inventory nationally and in most markets is higher than one year ago, it remains low from a historical perspective,” First American chief economist Mark Fleming said in a statement. “Nationally, housing supply is nearly 34% lower compared with June 2019, the summer before the pandemic hit. Nevertheless, as this analysis shows, the faster housing supply increases, the more affordability improves and the strength of a seller’s market wanes.”
The good news for buyers is that U.S. housing supply increased 21% year over year in June, and it rose in all four regions of the country as defined by the U.S. Census Bureau. Of the 50 markets in the U.S. that First American tracks, 48 saw an inventory increase. The two markets that didn’t experience inventory growth were New York and Cleveland, which saw declines of 5% and 2%, respectively.
Meanwhile, prices dropped in five markets — Raleigh (-2%); Austin (-2%); Portland, Oregon (-3%); Tampa (-5%); and Denver (-7%). Tampa’s improved affordability coincided with a whopping 62% year-over-year increase in inventory.
Three Florida markets experienced huge gains in inventory but worsening affordability. Orlando’s inventory rose 51%, but prices also rose 5%. Miami’s inventory increased 44% and prices jumped 4%. And in Jacksonville, prices rose 3% despite 44% growth in inventory.
The markets where prices grew the most compared to June 2023 were Memphis, Tennessee (13%); Providence, Rhode Island (12%); Cincinnati (11%); Buffalo, New York (10%); and Hartford, Connecticut (10%).
