Existing home sales have plummeted to their lowest level in about three decades, according to data from 2024, even as active listings across the country hit their highest point in 2024. This paradox leaves buyers with more choices but fewer actual purchases.
Active listings are at their highest levels in 2024, but new home sales and housing starts are significantly down, according to data from 2024. This disconnect shows a market where availability does not translate to transactions, complicating future home improvement and building trends.
The housing market now faces increased inventory but reduced new supply. This will likely give buyers more options in the existing market, yet affordability remains a hurdle, slowing overall transaction growth. This hides a critical collapse in new construction, which will lead to a supply shortage when affordability eventually improves.
A Mixed Bag: Modest Gains Amidst Broader Stagnation
- 0.8% — The S&P Case-Shiller U.S. National Home Price Index showed an annual gain in existing home prices in April, according to Kiplinger.
- 3.2% — Existing-home sales grew in May to 4.17 million annualized units, according to Kiplinger.
While existing home prices and sales saw a slight monthly uptick, these modest gains do not signal a robust recovery. The overall yearly trend for existing home sales remains historically dire, indicating a deeper, systemic slowdown.
New Construction Stalls as Inventory Grows
| Metric | May 2024 | Change from Previous |
|---|---|---|
| Total Housing Starts (annualized) | 1.177 million units | -15.4% |
| New-Home Sales (annualized) | 580,000 units | -7.3% |
Data according to Kiplinger (2024)
The sharp decline in both housing starts and new home sales points to a significant pullback in builder activity, despite rising overall inventory. Kiplinger's data shows a 15.4% drop in total housing starts (2024). Coupled with bldr's report that 70% of builders describe market conditions as weaker than expected, this suggests the housing market is actively undermining its future supply. This sets the stage for an even more acute affordability crisis when demand inevitably returns.
Builders Face Headwinds: Costs and Caution
Builders face cost pressures from high energy costs and a lack of land-use deregulation, according to Kiplinger. These financial burdens directly impact new projects. Roughly 70 percent of builders describe current market conditions as weaker than expected, according to bldr.com (2024). This pervasive pessimism, coupled with a 7.3% drop in new-home sales reported by Kiplinger, contributes directly to the reduced pace of new housing development. Companies reliant on new construction face a prolonged freeze, suggesting a significant contraction in the sector that will ripple through the broader economy.
More Choices for Buyers, But Affordability Remains Key
Roughly 60 percent of top markets have more inventory today than in 2023, according to bldr.com. This offers buyers more selection, a notable shift from recent scarcity. However, this benefit primarily serves those who can afford current prices and interest rates. The paradox of rising active listings, decades-low existing home sales, and a slight annual price gain reveals a market in stasis. Sellers are unwilling to drop prices, and buyers cannot afford them. This freezes transactions rather than correcting prices.
A Glimmer of Future Supply?
Builders are subtly laying groundwork for future housing options.
- Community count has risen for 10 consecutive months, ending in May 2024, according to bldr.com.
The consistent rise in community counts suggests builders are preparing for future demand, even with current housing starts down. This hints at a potential increase in new home options once market conditions become more favorable for construction.
The housing market will likely remain in a state of flux, balancing increased existing inventory with a critical shortage of new construction, until affordability improves and builder confidence returns.
