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Increased Inventory Spurs Price Cuts in Housing Market

In the last week of August, housing inventory rose for the first time in four years according to realtor.com data. The rise was small, with just two percent fewer listings for sale that in the same period last year. Realtor.com noted that the climb also stemmed from roughly 488,000 new listings entering the market in the month.

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While increased inventory can be a boon to buyers, as rising inventory softens prices, realtor.com also observed that current data trends on inventory and price cuts would need to continue for approximately two years or more before the real estate market could be termed a buyer’s market.

Real estate listings in the nation’s 45 biggest markets in the aggregate expanded 2.4 percent year over year.

Price Cuts Jump

Home price reductions hit 19.1 percent nationally in August, an increase from 17.6 percent last August and a large jump from the 13.1 percent of price cuts registered in 2012. The reasons? Realtor.com believes that home sellers are increasingly beginning to respond to buyer fatigue and are ratcheting down their expectations accordingly.

Not only that, but the U.S.’s bigger and more expensive real estate markets saw a larger proportion of price cuts, with 39 of the 45 biggest markets witnessing a jump in the percentage of price reductions.

Inventory growth also seemed to spur price cuts. Inventory in the top 10 areas with the larger increases in price reductions rose 19 percent over last year on average, compared with a 5 percent drop in inventory in the top 10 markets with the lowest reductions in price cuts.

The median listing price in the U.S. fell 1.3 percent, or roughly $4,000. This was the second biggest decrease since August 2015. The majority of large markets, 34 out of 45, witnessed slower growth in home prices than were registered last August.

The largest increases in inventory were seen in San Jose, Seattle, and San Diego. These three West Coast cities all saw jumps of 28 percent or greater. In the major markets of San Francisco, Dallas, Boston, Los Angeles, and New York, inventory jumps were also robust, although less robust than the first three cities.

In Miami and Chicago, inventory was relatively unchanged.

In Philadelphia, Milwaukee, and Indianapolis, inventory fell by 11 percent or more. Housing in all three cities is priced under the U.S. median.

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Slowing Price Gains

Although the media asking price across the nation is still on the rise, climbing 7 percent over last year, it slowed from last year’s 10 percent pace.

In the biggest markets, the asking price is decelerating even more, rising just 6 percent in the 45 biggest U.S. markets versus 8 percent last August. Just five of these markets registered gains in the double digits this August, while 16 did last August.

The bottom line for consumers? Prices are still going up, but the rate of increase is lessening.

Loan Sale Advisers Can Help Mortgage Lenders Manage Assets

Although the housing market in major markets is still good, decelerating price increases and rising inventory may mean that mortgage lenders need to manage their assets going forward. Buying and selling mortgage portfolios can maximize profits and moderate risk, protecting against potential downturns.