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The Great Housing Reset: Why the Market is Tightening Faster Than You Think

The housing market is currently caught in a "tug-of-war" between long-term supply growth and a sudden short-term tightening. If you look only at the annual headlines, you see a market with plenty of homes; but if you look at the monthly data, a different story emerges.

We’ve broken down the latest existing home sales data to reveal the three trends defining the market right now.

1. The Inventory Illusion: Up Annually, Down Monthly

On paper, the market looks much healthier than it did a year ago. Housing inventory is up 7.5% compared to last year, and the Months Supply has grown by over 10%.

However, the "Monthly" data tells us that this surplus is being eaten up quickly. Last month alone, the supply of single-family homes dropped by nearly 7%. This suggests that while we have more homes available than in the post-pandemic "dry spell," the recent surge in buyer activity is beginning to outpace new listings.

2. Single-Family Homes Lead the Recovery

While the broader market is stabilizing, the Single-Family Home segment is the clear engine of growth.

• Sales Volume: Monthly sales for single-family homes grew by 0.81%, outperforming the general market.

• Absorption: The supply of single-family homes is dropping faster than any other category, indicating that demand for traditional homes remains the primary driver of market movement.

3. Prices are Finding a "New Normal"

For those waiting for a significant price correction, the data suggests we are in a period of stability rather than a slide. Median sales prices dipped slightly this month ($-1.4\%$), but they remain 1.2% higher than they were a year ago. We are seeing a "flat" price environment where the extreme bidding wars of the past are gone, but the high demand and limited supply are preventing a downward spiral.

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The Data at a Glance

Metric	Monthly Change	Annual Change	Market Signal
Existing Home Sales	+0.49%	-0.96%	🟢 Recovering
Housing Inventory	-5.92%	+7.52%	🟡 Tightening
Median Sales Price	-1.37%	+1.19%	⚪ Stable

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What This Means for You

For Buyers: The window of "high inventory" might be closing. While there is more to choose from than last year, the monthly drop in supply suggests that competition is heating up again. However, the slight monthly dip in prices offers a small margin of relief.

For Sellers:

Don't be discouraged by the "Annual" inventory headlines. The monthly trend shows that supply is actually decreasing, which means your home may face less competition today than it did three months ago. With sales volume starting to tick upward, the timing for a listing is improving.

The Bottom Line

The housing market isn't "crashing" or "booming"—it's rebalancing. We are moving away from the stagnant low-volume days of last year and into a phase where homes are moving again, prices are stable, and the "supply glut" is being managed by steady demand.

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Want to dive deeper into the data? Would you like me to create a specific section on how interest rate trends might be impacting these monthly sales upticks?