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During the pandemic-era housing market, inventory was thin because of a frenzied combo: A glut of new listings, and even more buyers to scoop them up.
As the market turned in 2022, buyers began to drop out of the market. Sellers, persuaded by their own ultra-low rates, backed out even faster.
But hidden behind the typical seasonal downswing in the second half of 2023, a surprisingly robust momentum of new listings began to build. And that trajectory may be kicked into higher gear now that mortgage rates have finally begun to decline from their peak.
- The number of new listings coming onto the market ended the year less than 15 percent below pre-pandemic levels for the month of December — down from 35 percent below normal as recently as April, according to an Intel analysis of Zillow listing data.
- This momentum in new listings was reinforced by year-over-year gains in both November and December, the first full months after mortgage rates began to fall.
As is always the case with the U.S. housing market, this broad trend is exaggerated in some markets such as Florida, where many markets are well on their way to a full pre-pandemic recovery in new listings.
But other parts of the country have yet to see a pronounced uptick in new listings, holding back the real estate industry in places like New York and the West Coast.
See where the burgeoning inventory turnaround is picking up steam in the full report below.
A turning point
Even though the underlying trend in new listings has improved, there’s a very good reason why most real estate professionals likely haven’t felt it yet: normal seasonal patterns that discourage people from listing their homes for sale.
- In the second quarter of 2023, nearly 1.1 million U.S. homes were placed on the market, Zillow’s data shows, a number that steadily declined throughout the rest of the year, reaching 733,000 in the fourth quarter.
- But this is only half the picture. That second-quarter number was nearly 31 percent below the average number of new listings placed on the market at the same time of year in 2018 and 2019.
- Had the market underperformed by the exact same amount throughout the rest of the year, we would have expected only 608,000 new listings to come online in the fourth quarter of 2023 — well below the 733,000 Zillow actually reported.
So we see there was some newfound underlying strength in new listings.
Chart by Daniel Houston
One other observation unique to the pandemic market: The typically busiest seasons for new listings, spring and early summer, generally did not exceed prepandemic expectations even at the height of the rush. The slow months, on the other hand, saw unusually strong new listings numbers, with the exception of the steep downturn in late 2022.
Hot or not
In analyzing these numbers at the market level, some clear regional takeaways emerged.
Homeowners in the biggest metros in Florida, Texas and the Midwest have been increasingly comfortable with testing the market — a fact that has served as a relative boon to real estate businesses in those areas.
- Miami saw new-listing levels in the fourth quarter of 2023 that were down only 15 percent from their highest fourth-quarter marks in recent years, and only 12 percent lower than their pre-pandemic normal.
- Other Florida markets — including Tampa and Orlando — saw declines well under that of the U.S. new-listing tally, which was down 25 percent from its previous fourth-quarter peak, and down 16 percent from pre-pandemic levels.
- The Texas metros of Dallas and Houston were also ahead of national trends for new listings, as were Midwest cities of Detroit, St. Louis and Cleveland.
Some smaller communities outpaced the national recovery of new listings to an even more dramatic degree.
- New Orleans recorded 34 percent more new listings come online in the fourth quarter of 2023 than it did at the same time of year before the pandemic began.
- The border city of McAllen, Texas, saw 48 percent more new listings to close this past year than it did in 2018 and 2019.
- Milwaukee, Wisconsin, and Oklahoma City were up 6 percent and 3 percent from pre-pandemic levels of new listings.
Still, some of America’s largest metropolises have recorded a continued depressed market in new listings — one that is unlikely to be erased any time soon.
- In New York City, new listings in the fourth quarter were down 43 percent from their recent fourth-quarter peak, and remained 31 percent below pre-pandemic levels.
- Washington, D.C., followed a similar pattern: down 48 percent from their peak and 27 percent from pre-pandemic norms.
- Meanwhile, a host of West Coast markets experienced similarly stale new-listing numbers almost across the board — including Los Angeles, San Francisco, Seattle and Portland.
As the Fed starts to pull back on interest rates — and as mortgage rates continue to fall — we can expect more homeowners to feel comfortable giving up their favorable loan terms and listing their homes.
The effect may just hit some markets sooner than others.
