Question: Are you seeing any signs of more supply coming to the housing market?
Answer: Housing supply and interest rates are the data points I’ve been most focused on lately and after a glimmer of hope that supply was increasing in February, the trend reversed in March (wrote about it here), but April and early May readings are providing more hope that we may finally see a real trend reversal towards more supply coming to market.
Significant Increase in New/Active Listings
The Northern VA and Greater DC markets (as well as smaller markets within those regions) both experienced significant year-over-year (YoY) increases in the number of new listings to market in April and the number of active listings for sale. Both metrics in each region came in at a double-digit increase, except for YoY active listings in Northern VA, landing at a 9.4% increase. These increases were evenly distributed across all housing types (detached, townhouse, condos) which is a good sign for the overall market.
In the DC Metro area, we are also seeing week-over-week increases in active and new listing inventory.
A continuation of the supply trend into/through the summer will be great for the health of the housing market and help struggling buyers by reducing upwards pressure on prices, reducing competition, and increasing choices.
Demand and Buyer Activity is Modest
The competition and price appreciation in 2024 has been supply-side driven rather than due to high demand (demand has been limited by interest rates). We see this in the weekly showing activity data – showings in the DC Metro are down 16.6% YoY and well below 2021/2022 volumes.
Months of Supply Trending Towards More Balance
Months of Supply (MoS) combines supply and demand into one reading – higher MoS is better for buyers, lower MoS is better for sellers. A market in balance should have around six months of supply, which we don’t come close to in the DC area.
With the latest improvements to supply combined with modest demand, MoS in Northern VA and the Greater DC area reached their highest April readings since 2019 and is on pace to reach its highest readings in nearly five years.
Prices and Competition Might Start to Cool
A few weeks ago I used historical seasonal data to suggest that the market would likely start to cool down in May and end up on a slow, steady cooling-off through the end of the year (article link). If some of the supply trends we’re seeing continue through the summer, that might amplify the normal seasonal cooling and lead to a much better buyer experience through the rest of the year.
Unless we experience a rush of inventory, which I don’t expect, prices probably won’t come down significantly but should cool off from the explosive 8-10%+ increases we’ve experienced so far this year.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to [email protected]. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube on the Eli Residential channel.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.
