Housing Inventory Up 0.1% Week-over-week, Down 9.4% from 2019 Levels

Active single-family housing inventory rose 0.1% week-over-week but declined 9.4% from 2019 levels. Inventory was up 22.2% compared to the same week in 2024 and down 9.4% compared to 2019. It appears that inventory will be close to 2019 levels by the end of 2025.

The U.S. housing market is showing signs of recovery, with active single-family housing inventory rising by 0.1% week-over-week as of July 2, 2025. While this marks a slight increase, it remains 9.4% below 2019 levels, indicating that the market is still in a state of normalization [1].

Inventory has rebounded significantly, up 22.2% compared to the same week in 2024, suggesting a steady recovery. This trend is particularly notable in Sun Belt states, where inventory has recovered by 25-35% post-pandemic. States like Arizona, Colorado, Florida, Texas, and Washington have seen a significant increase in new construction, offsetting pandemic-era supply shocks [1].

However, the national inventory remains 13.4% below 2019 levels due to the "lock-in effect," where homeowners with low mortgage rates are reluctant to sell. Despite this, new listings have increased in 2025 compared to 2023 and 2024, signaling a gradual easing of this constraint [1].

Mortgage rates remain a critical factor, currently hovering around 6.78% and projected to decline modestly to 6.1% by year-end. This elevated rate environment has suppressed demand, particularly among first-time buyers, but has also driven affordability-driven demand in home improvement sectors [1].

The housing market's regional divergence is evident. Sun Belt markets like Florida and Texas are experiencing cooling conditions due to oversupply and affordability challenges, while the Northeast and Midwest are tightening with inventory remaining 40–50% below 2019 levels [1].

Investors should focus on single-family builders in the Sun Belt, multifamily REITs in the Northeast, and home improvement firms. Single-family builders like D.R. Horton (DHI) and Lennar (LEN) are adapting to regional price corrections and increased competition, while multifamily REITs like Mack-Cali Realty (CLI) are capitalizing on urban demographic shifts [1].

The $12 trillion equity boom is also driving demand for home improvements, benefiting companies like Window World (WWIN) and Lowe's (LOW). Mortgage servicers like Mr. Cooper (COOP) and Rocket Mortgage (RKT) are gaining traction from delistings and price corrections in oversupplied markets [1].

However, investors should be aware of potential risks such as policy uncertainty, labor shortages, and rate volatility. A potential Trump administration could introduce zoning reforms and GSE privatization, while immigration restrictions could exacerbate construction bottlenecks [1].

In conclusion, the U.S. housing market is transitioning towards balance, with inventory normalization and affordability-driven demand acting as key catalysts. Despite challenges, the sector offers compelling opportunities for investors who can identify undervalued equities and regional trends. For those with a medium-term horizon, single-family builders in the Sun Belt, multifamily REITs in the Northeast, and home improvement firms represent a well-diversified portfolio aligned with the market's evolving dynamics.

References:
[1] https://www.ainvest.com/news/housing-market-rebound-mortgage-rate-dynamics-strategic-buy-opportunity-real-estate-housing-linked-equities-2508/