Greater Inventory Brings Back Buyers to the Real Estate

By: Melissa Dittmann Tracey – realtor.com

A surge in housing inventory nationwide may be reviving the real estate market after a sluggish period. Existing-home sales, covering single-family homes, townhomes, condos, and co-ops, rose 4.2% in February from January, per the National Association of REALTORS® (NAR).

“Home buyers are gradually returning,” says NAR Chief Economist Lawrence Yun, despite high mortgage rates and home prices. “More inventory is unlocking pent-up demand.” Inventory climbed 5.1% month over month and 17% year over year, while single-family construction hit a one-year high, up 11.4%, per the Commerce Department.

After a cold winter slowed buyer activity, Yun notes “encouraging signs” as spring begins. The median existing-home price rose 3.8% to $398,400, with all U.S. regions seeing gains, led by a 10.4% jump in the Northeast. “Each 1% price increase adds roughly $350 billion in housing equity,” Yun says, totaling nearly $1.3 trillion in gains amid a stock market dip.

Inventory growth hasn’t softened prices, supported by a housing shortage and low default rates. Cash sales, often from investors and second-home buyers, made up a third of February transactions, though their share dropped to 16% from 21% a year ago.

Affordability remains a challenge with mid-6% mortgage rates, yet first-time buyers rose to 31% of sales, up from 24% last year. Demand persists—21% of homes sold above list price, per NAR’s Confidence Index, with homes averaging 2.3 offers. Builders are competing with incentives (60% offered in March) and price cuts (29% reduced prices by 5% on average).

Regionally, sales soared 13.3% in the West but fell 2% in the Northeast. Median prices: Northeast ($464,300, +10.4%), Midwest ($295,500, +5.8%), South ($358,800, +1.9%), West ($614,600, +3.6%).