Inventory is finally returning to normal in some metros, but high prices and mortgage rates are keeping buyers at bay.
After years of sky-high prices and tight supply, the housing market in parts of the U.S. is finally starting to breathe again. In cities like Seattle, Denver, and Austin, home inventory has not only rebounded—it’s actually higher than it was in 2019, before the COVID-19 pandemic reshaped the real estate landscape.
But make no mistake: this isn’t a buyer’s market yet. While listings are up and more sellers are cutting prices, steep borrowing costs and lingering affordability challenges are keeping many would-be buyers stuck on the sidelines.
Housing Inventory Is Climbing—But Not Everywhere
Nationwide, the number of homes for sale is still below pre-pandemic averages. But according to Realtor.com’s May Housing Report, listings have increased for the 19th month in a row—up more than 30% compared to May 2023. That’s a meaningful shift, and in 22 of the 50 largest metro areas, housing inventory is now higher than it was in 2019.
Some standouts:
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Denver has twice the inventory it had pre-pandemic.
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Seattle, Dallas, and Austin are each seeing more than a 50% increase in listings compared to 2019.
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On the flip side, cities like San Francisco and New York still struggle with limited inventory, showing less improvement and continuing affordability issues.
The takeaway? Supply is rebounding fastest in places where new home construction has been relatively strong in recent years.
“In some areas, affordability concerns have also slowed buyer demand, giving the market room to breathe,” said Danielle Hale, Chief Economist at Realtor.com. “In general, we’re seeing strong inventory rebounds in metros that have built more in the last 6 years.”
Price Cuts Are Up, But Median Prices Haven’t Budged
Despite the boost in inventory, prices aren’t dropping—at least not across the board. The median listing price in May remained flat at $440,000, the same as this time last year. However, nearly 1 in 5 sellers cut their asking price, the highest rate of price reductions since 2016.
That suggests that while sellers are still aiming high, many are being forced to adjust expectations as homes sit unsold longer than they did during the pandemic frenzy.
Mortgage Rates Stall Sales and Impact Investors
Mortgage rates continue to be a major drag. In May, the average 30-year fixed rate hovered around 7%, keeping financing out of reach for many buyers. The result? Home sales dropped 2.5% year-over-year.
From an investment perspective, this slowdown is causing a cautious pause in real estate markets. Lenders and investors watching rental markets are seeing increased demand, as would-be buyers stay put longer, but the uncertainty is slowing some new development projects.
Housing analyst Mark Peters from CBRE offered a contrasting view:
“While rising inventory in some metros signals better choice for buyers, the persistently high prices and mortgage rates mean we’re far from a market reset. Investors should expect continued volatility, especially in gateway cities with limited supply.”
What This Means for Buyers, Sellers, and the Economy
If the current trends hold, buyers may have more options but still face tough affordability hurdles—particularly in high-demand urban centers with limited new construction.
Sellers, meanwhile, face a tricky balancing act between maintaining price expectations and competing in a market where buyers are increasingly price sensitive.
On a macroeconomic level, housing supply constraints in major metros could keep inflationary pressures on home prices, while slowing sales dampen related sectors like home improvement and furnishings.
This dynamic also matters to policymakers: improving inventory is positive, but persistent affordability issues highlight the need for targeted housing policies that support both supply expansion and buyer access.
People Also Ask
Is the housing market finally improving for buyers?
Yes and no. Inventory is rising in several cities, giving buyers more options than they had during the pandemic. But high prices and 7% mortgage rates are still keeping affordability low. It’s an improvement, but not a full turnaround.
Which cities have more homes for sale now than before the pandemic?
Cities like Denver, Seattle, Austin, and Dallas now have significantly more inventory than in 2019. Denver’s housing supply has even doubled compared to pre-COVID levels. However, cities like San Francisco and New York remain tight markets with less improvement.
Why aren’t home prices falling even though supply is up?
While more homes are on the market, demand is still weak. Sellers are initially pricing high, but many end up cutting prices later. So far, increased inventory hasn’t been enough to pull the median price below last year’s levels.
What defines a buyer’s market, and are we there yet?
A buyer’s market typically means there’s six months or more of housing supply—enough homes for the current rate of sales. Right now, the U.S. has about 4.6 months of supply, so technically, it’s still a seller’s market—though with less intensity.
Are homebuilders responding to the demand?
Yes. The inventory build-up has encouraged more new construction in many markets. However, rising labor and materials costs mean new builds aren’t always more affordable for buyers.
Sales Are Slowing, Even As Listings Rise
Despite more homes hitting the market, actual sales are still slipping. May saw a 2.5% drop in home sales compared to last year. Buyers are still waiting for mortgage rates to fall—or for prices to drop more significantly—before jumping in.
“This milestone underscores both the importance of enabling housing construction and the growing divide in housing conditions across regions,” said Hale. “Some markets are rapidly normalizing, while others remain stuck in low-supply dynamics.”
So while the housing picture is starting to look a little less bleak, most buyers and sellers are still locked in a kind of high-stakes waiting game. And until either prices or interest rates shift meaningfully, that pause may continue well into the year.
