The spring housing market is shaping up to be a boon for homebuyers looking for more affordable properties.

A new report by Realtor.com® has found that the number of homes actively for sale in February was 14.8% higher than this same month last year. That’s the fourth straight month of more homes on the market.

“This is the most inventory that we’ve seen year to date since 2020,” says Realtor.com® Chief Economist Danielle Hale. “More inventory means more choice for buyers.”

These aren’t musty, picked-over properties either: New listings from home sellers just entering the market shot up by 11.3% in February compared with last year.

Another refreshing breeze is sweeping through a stale housing market as well: Home price growth has slowed.

What does this mean for homebuyers and sellers?

“The spring housing market could shape up to provide home shoppers with a more plentiful supply of less expensive homes than last year,” says Realtor.com economic data manager Sabrina Speianu in her analysis. Although inventory is still not as plentiful as in the pre-pandemic days, “home shoppers will have more choice, and in particular more choice of lower-priced homes.”

The bouncing mortgage rate factor

Yet whether the housing market truly heats up depends on mortgage rates, which have been on a bit of a roller-coaster ride since the fall. They hit an average of 7.79% in the week ending Oct. 26 for 30-year fixed-rate loans, according to Freddie Mac data.

Mortgage rates dropped abruptly in December after the U.S. Federal Reserve indicated it would be cutting its own short-term interest rates. (While the Fed’s rates and mortgage rates are separate, mortgage rates often follow in the same direction.)

This led to mortgage rates coming down and stabilizing around 6.6% in the early weeks of the new year. However, the reprieve did not last long. Rates shot back up to 6.94% for the week ending Feb. 28, according to Freddie Mac.

“Consistently strong economic and labor market conditions and an uneven decline in inflation has pushed the Federal Reserve Board into a wait-and-see approach to determine the best timing for future rate cuts, a factor driving increased mortgage rates in late February,” says Speianu.

Home prices remain relatively steady

As the seasons change, so do home prices. They tend to start the year on the lower side and rise as the weather warms up.

So far, 2024 is shaping up to be no different, with the price of a median home rising about 1.5%, to $415,500 in February compared with $409,500 in January.

Annually, home price growth has slowed. The median list price ticked up by just 0.3% compared with last year.

Hale adds that, according to economic forecasts, “home prices will be relatively stable in 2024. We’ll still see the usual seasonal ramp-up, but I don’t expect to see much growth beyond that.”

Another bright spot on the affordability horizon? More homes for sale saw price reductions, with the percentage increasing to 14.6% this year compared with 13.2% last February.

“A rising share of price reductions suggests that today’s sellers are responding to market conditions and motivated to adjust to find buyers if they find they’ve priced too high initially,” says Hale.

And while home seller flexibility will vary greatly by market, Hale adds, “Home prices remain high, but the data suggest that buyers may have some room to negotiate when submitting an offer.”

Where housing inventory is up—and prices down

Home sellers came out in force this February in large Southern metros, which saw active home listings grow by a whopping 17% on average compared with last year.

Buyers looking for a bargain in warmer climates well below the median home price are in luck.

“In February, the South as a whole has been largely driving the increase in availability of homes priced between $200,000 and $350,000, a price category that saw the most year-over-year growth nationally,” says Speianu.

Metros that saw the largest increases in the number of homes for sale included Orlando, FL, up 38.5%; Miami, up 37.4%; and Tampa, FL, up 36.3%.

Meanwhile, large Western and Northeastern metros saw a drop in housing inventory in February, by 1.0% and 4.2% on average, respectively.

Homes spent 61 days on the market in February, three days shorter than last year. Buyers who find a home as spring draws near might not want to hesitate in making an offer.

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