More Homes for Sale? Here’s Why That’s Great for Buyers

Maybe you’ve heard the number of homes for sale has reached a recent high. And it might make you question if this is the start of another housing market crash. But the reality is, the data proves that’s just not the case. In most areas, more inventory isn’t bad news. It’s actually a sign of the market returning to a more stable, healthy place.

What’s Going on With Inventory?

Based on the latest data from Realtor.com, inventory just hit its highest point since 2020, shown with the white line in the graph below. But what you need to realize is, at the same time, inventory levels still haven’t returned to pre-pandemic norms (shown in gray):

That means there are more homes for sale now than there have been in quite some time – a shift that gives buyers more choices, reduces competition, and creates a healthier, more balanced market overall. It’s a positive trend that can make the homebuying process feel less stressful and more manageable.

And while it’s true inventory is up significantly compared to where it was over the last few years, the number of homes on the market is still well below typical levels. And that’s important context.

Why This Isn’t the Problem A Lot of People Think It Is

Some people hear inventory’s rising and immediately think about 2008. Because back then, inventory spiked just before the market crashed. But today’s situation is very different.

Here’s the key reason why. We don’t have a surplus of homes; we have a deficit to climb out of. What we’re dealing with is a long-term housing shortage – and it’s a big one.

The red bars in the graph below show all the years where housing starts (new builds) didn’t keep up with household formation, going all the way back to 2012. The deeper the bars in the graph, the more the housing deficit grew (see graph below):

And one of the reasons this housing shortage kept growing is because new home construction just didn’t keep up with the number of people who need to buy homes. In fact, the U.S. is actually short millions of homes at this point, and it will take years to overcome that gap. Realtor.com says:

At a 2024 rate of construction relative to household formations and pent-up demand, it would take 7.5 years to close the housing gap.

That means, in most areas, there’s no real risk of having too many houses or an oversupply of homes for sale on the market right now. In fact, it’s quite the opposite. Many local markets across the country are still facing a significant housing shortage and could benefit from even more homes for sale becoming available. That’s why, even though inventory levels and the number of homes for sale are rising, it’s not something to worry about on a national scale. It’s simply the market beginning to rebalance after years of low supply.

Bottom Line

Don’t let the headlines mislead you. An increase in the number of homes for sale doesn’t mean the housing market is crashing. In fact, rising homes for sale is a healthy shift that signals a return to more typical market conditions and gives buyers more options and breathing room.

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Jess & Co. Real Estate, LLC does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Jess & Co. Real Estate, LLC will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.