When compared to the same month a year ago, 24.6% more homes were actively listed for sale on a given day in January, following a 15-month trend of higher annualized inventory levels. It’s also higher than December’s annualized increase of 22% more available listings on a daily basis.
In total, inventory levels were 10.8% higher than in January 2024, good for the highest level for any January since 2021. Despite this growth, inventory levels are still below levels in 2017 and 2019, Realtor.com said.
Home buyers and sellers are ending a longstanding stalemate, Realtor.com chief economist Danielle Hale shared in the report. She also highlighted lower mortgage rates and a decline in lock-in effect as key drivers behind more listings in January.
“The shift in seller activity could mark a turning point in the high mortgage rate-induced standoff between buyers and sellers,” Hale said. “The uptick is likely due to some residual benefit from fall’s lower mortgage rates, which could fade. But drivers such as the need for families to adapt to life changes and the easing of the lock-in effect could bring more movement from sellers by year’s end.”
Pending listings also continued their return to form in January, increasing 1.8% year over year. This is much lower than the 7.4% 7.4% annualized increase in December, but higher mortgage rates in January are a likely reason for this. The total number of homes for sale — including pending sales — have increased 17.1% over the past year, a continuation of a 14-month trend.
All four regions of the country saw growth in January. The West saw 31% more listings, followed by the South (+27%), Midwest (+16.8%) and the Northeast (+7.8%).
At the metro level, the most inventory growth was in Denver (+54.8%), Las Vegas (+49.4%) and Tucson, Arizona (+45%). Only 14 metro areas surpassed pre-pandemic inventory levels. The leading areas — Denver, San Antonio and Dallas — were in the South and West regions.
Some may wonder how long these listings are staying on the market. That angle tells a different story, with homes spending an average of 73 days on the market. By comparison, that’s five more days than in January 2024 and three more than in December 2024. Realtor.com said this represents the slowest January since 2020, following a 10-month trend of slower times on market.
Listings in the South and West spent five to six more days on the market compared to a year ago. Midwest listings bucked the trend, leaving the market two days faster than a year ago. Meanwhile, time on market in the Northeast remained unchanged.
Locally, 43 of the top 50 metro areas posted higher time-on-market ratings for listings, led by Nashville (+19 days) and Orlando (+15 days).
Price cuts could be the answer for shortening the time on market, according to Realtor.com. More than 15% of listings had price cuts this month, which was slightly higher than last year. To drive home that point, Realtor.com noted that the median price of homes this month ($400,500) was 2.2% lower than a year ago. This could mean that sellers are willing to compromise if it means getting their home sold.
As the year continues, Realtor.com said that a declining lock-in effect could bring more listings to the market. But only time will tell if that rings true.
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