Unsold
inventory
of
homes
on
the
market
has
been
climbing
in
the
U.S.
for
two
years,
right
along
with
rising

mortgage
rates.
In
general,

inventory
rises
with
rates
because
more
expensive
money
slows
demand.
When
demand
slows,
inventory
grows. 

According
to


Altos
Research,
there
are
40%
more
homes
on
the
market
at
the
end
of
August
2024
than
there
were
last
year
at
this
time.
That
means
currently
just
over
700,000
single-family
homes
are
unsold,
with
about
10%
of
those
going
into
contract
each
week,
and
another
75,000
new
listings.
But
still,
there
are
about
300,000
fewer
homes
on
the
market
now
than
in
August
of
2019.
Inventory
is
climbing
but
it’s
still
pretty
restricted.

And
importantly,
inventory
isn’t
growing
everywhere
equally.

Florida
and

Arizona
have
70%
more
homes
unsold
on
the
market
now
than
last
year,
while
New
York
has
only
10%
more.

While
every
state
in
the
country
has
more
homes
unsold
on
the
market
than
last
year,
2023
wasn’t
“normal.”
We
were
still
emerging
from
the
crazy
pandemic
market.
So
rather
than
comparing
to
last
year,
the
closest
we
get
to
a
“normal”
market
is
to
use
2019
as
a
baseline.
And
eight
states
have
more
unsold
inventory
than
in
2019. 

That
is,
eight
states
are
back
to
“normal.”

Meanwhile,
some
states,
especially
in
the
Midwest
and
Northeast,
still
have
barely
more
available
inventory
than
during
the
pandemic.

Illinois
and
Connecticut
have
almost
75%
fewer
homes
for
sale
now
than
in
2019. 

In
the
map
below,
the
lighter
states
have
more
homes
unsold.
Inventory
is
building
in
these
states
compared
to
2019
—
these
are
much
more
normal
conditions
than
the
rest
of
the
country.
These
states
are
Oklahoma,
Texas,
Idaho,
Florida,
Arkansas,
Alabama,
Tennessee
and
Utah,
with
Colorado
getting
close
to
positive
inventory
levels.

Why
does
it
matter?

One
reason
to
pay
attention
to
these
inventory
trends
is
that
the
faster
we
get
back
to
“normal”
markets,
the
better
the
environment
will
be
for
homebuyers.
Buyers
have
more
selection,
with
less
upward

price
pressure,
in
an
affordability-challenged
market. 

Another
interpretation
of
these
inventory
trends
is
more
bearish.
That
is,
areas
with
greater
supply
of
unsold
homes
are
more
likely
to
have
downward
price
adjustments.
For

housing
market
watchers
who
are
expecting

home
prices
to
decline,
they’re
looking
for
areas
where
supply
and
demand
grow
significantly
imbalanced.
These
eight
states
are
the
leading
candidates.

Why
these
states?

Why
do
these
states
have
such
inventory
growth,
when
much
of
the
Midwest
and
Northeast
have
barely
budged
off
the
pandemic
lows
of
inventory?
The
answer
seems
to
lie
in
migration
patterns. 

During
the
pandemic,
most
of
these
states
were
inbound
migration
states.
People
moved
from
the
Northeast
to
Florida.
Or
moved
from
California
to
Texas
and
Idaho.
(Migration
is
within
the
U.S.,
from
state
to
state.
Don’t
confuse
this
trend
with
immigration
from
outside
the
country).
These
migration
patterns
were
already
underway
and
they
were
turbocharged
during
the
pandemic.

Homebuilders
leaned
into
the
trends
and
have
been
building
a
lot
of
homes
in
these
parts
of
the
country. 

Since
mortgage
rates
started
rising
in
2022,
Americans
have
shifted
into
what
we
might
call
The
Great
Stay.
We’re
moving
less.
Migration
is
way
down.
We’re
quitting
our
jobs
less.
Companies
are
hiring
less.
We’re
buying
and
selling
fewer
homes. 

Since
2022,
Americans
are
staying
put. 

So
If
Chicago
has
a
long
history
of
outbound
migration,
those
homes
would
normally
be
listed
for
sale.
Those
Chicagoans
would
normally
be
buying
a
home
in
Dallas.
The
“normal”
Chicago
housing
market
assumes
a
certain
outbound
flow.
The
Dallas
housing
market
assumes
a
normal
inbound
flow.
When
that
flow
stops,
there
are
fewer
homes
sold
in
Chicago,
and
more
unbought
in
Dallas.

According
to

John
Burns
Real
Estate
Consulting
–
Austin,
Texas,
in
2024
actually
has
net
outbound
migration
—
perhaps
for
the
first
time
in
15
years.
More
Americans
are
moving
out
of
Austin
than
in
—
at
least
for
this
stretch
in
2024.

Idaho
and
Utah
famously
had

dramatic
migration
from
California
during
the
pandemic.
That
firehose
has
slowed
to
a
trickle.

Consider
homebuilding
rates.
These
destination
states
have
almost
all
had
the
highest
rates
of
new
construction
in
the
country.
If
builders
are
expecting
the
migration
wave
to
continue,
and
it
doesn’t,
then
inventory
builds. Likewise,
construction
in
a
place
like
Ohio
can
be
at
a
very
slow
pace,
since
the
state
has
outbound
migration.
But
when
that
migration
stops,
then
the
construction
pace
isn’t
fast
enough. 

Why
outbound
migration? 

It’s
not
just
slowing
inbound
migration
that
impacts
the
inventory
in
these
states.
The
costs
of
homeownership
are
climbing
too.
Texas,
in
particular,
is
a
high
tax
state
for
real
estate.
If
you
bought
a
home
in
2019
in
Austin,
your
taxes
are
dramatically
higher
now.
Colorado
—
which
still
has
fractionally
fewer
homes
on
the
market
than
2019,
but
is
next
in
line
to
cross
over
—
has
property
tax
relief
on
the
ballot
this
fall
because
homeowners
are
paying
so
much
more
in
taxes
after
the
sharp
rise
in
home
prices
of
the
last
four
years.

Florida
homeowners
have
the
tax
costs
and
also
have
sharply

rising
insurance
costs
—
especially
after
Hurricane
Ian.
If
you
own
a
second
home
in
coastal
Florida,
even
with
a
3%
mortgage,
your
insurance
costs
may
have
tripled
in
recent
years. When
the
costs
to
hold
real
estate
rise,
we
hold
less
real
estate.
We
sell
more,
that
adds
to
inventory. 

What
happens
next?

The
Great
Stay
seems
to
be
the
product
of
higher
mortgage
rates
and
a
cautious
outlook
on
the
economy.
Businesses
are
afraid
to
hire
too
much
and
employees
are
afraid
to
quit
the
good
gig
they
have.
Homeowners
have
their
well-documented

mortgage
rate
lock-in
effect
after
a
decade
of
ultra-low
mortgage
rates.
The
macro
economic
trends
that
finally
motivate
the
labor
market
are
probably
the
same
trends
that
motivate
migration
and
home
buying
in
the
destination
states. 

Are
these
eight
states
the
harbinger
of
inventory
gains
—
or
of
imbalances
that
lead
to
a
home-price
correction?
Or,
as
the
business
cycle
turns,
do
these
extreme
conditions
gradually
ease? 

If
we’re
lucky
and
we’ve
passed
the
peak
of
interest
rates,
then
the
Great
Stay
trends
may
also
be
at
their
peak
now.
That
implies
that
in
2025,
inventory
tightens
in
the
destination
states
and
probably
eases
a
bit
in
the
outbound
states. 

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