Housing inventory lagging for first time in 4 years
The market has about 1% less inventory now than a year ago, Compass’ chief economist said. If the trend continues, buyers may see prices start to rise again.
In a sign that the housing market may have reached a key "inflection point," inventory has fallen below the previous year's pace for the first time in four years, according to Compass International Holdings Chief Economist Mike Simonsen.
Inventory was up from the previous week amid the spring homebuying season peak, Simonsen said in his June 1 market update. However, inventory is currently rising at a slower pace than this time last year, with about 1% less inventory on the market now.
"For a couple months, I've noticed that this inflection point was looming — and it is here," Simonsen said.
Citing data from Compass and his real estate analytics firm Altos Research, Simonsen said the shift is an important one that could lead to a phase in which home prices start rising more significantly. But "that's not here yet," he said. "Supply has been rising quickly for several years, and so in 2026 home prices are flat or down in most markets around the country."
Despite recent gains, the national housing supply shortage persists, with Simonsen noting that inventory is still 15% below the levels seen in 2017. "We don't really have room for inventory to fall before we see upward pressure on prices," he said.
Inventory drops are widespread, but uneven: Some of the more dramatic inventory declines are occurring in Florida, with Miami seeing active listings in April drop 11.4% year-over-year, according to the Miami Association of Realtors.
Chicago and New York are meanwhile "at crisis shortage levels of inventory — and heading lower still," Simonsen said.
In contrast, Seattle is leading in inventory increases. In King County, overall inventory in April was up nearly 30% year-over-year, according to Northwest Multiple Listing Service data. Though living in the area remains expensive, with the median price for a home sold in April pegged at $859,000, home prices have dropped 5.3% compared to April 2025.
New listings sluggish: While slightly ahead of last year's pace, new listings are staying low nationally — a trend that could continue even as buyer conditions improve.
According to Compass and Altos Research data, home sales in May inched up 6% year-over-year, while new listings increased only 2%. "When sales pick up a bit — even a little bit — inventory declines," Simonsen said.
Home prices expected to jump: In its April Home Price Index report released June 2, Cotality estimated that home price growth increased 0.3% year-over-year and climbed 0.4% between March and April. The company is forecasting a 5.3% increase by April 2027.
"Market strength suggests that some buyers remain insulated from mortgage-rate volatility and are supported by substantial home equity and stock market gains," Cotality Chief Economist Selma Hepp said in the report.
Market outlook remains cloudy: It's unclear whether the slowing inventory trend will hold. If mortgage rates continue rising and demand weakens, inventory could resume marching above last year's levels.
"Home buyers have shown a willingness to wait when conditions have been unfavorable," Simonsen said. "Bad inflation news could drive rates higher and we'd be suddenly back to rising inventory again."