Contrasting Trends in the U.S. Housing Market: A Deep Dive into Regional Dynamics

The landscape of the U.S. housing industry is experiencing divergent trajectories, with some regions witnessing a rapid slowdown after the pandemic-driven boom, while others, particularly in the Sunbelt, continue to demonstrate resilience. According to recent insights from John Burns Learn & Consulting, these contrasting patterns highlight the complex nature of the current real estate environment.

Surge in Available Listings Reshapes Market Conditions

Across the nation, the inventory of resale homes has seen a significant increase, fundamentally altering market dynamics in areas that previously experienced the most intense demand during the COVID-19 pandemic. In April, the number of homes listed for resale rose by 21% compared to the same period last year. This growth is uneven across regions, with the Southwest experiencing a 53% rise, while the Midwest saw a modest 16% increase.

To better understand market pressure, analysts often compare current inventory levels to pre-pandemic figures. For instance, North Florida now has 38% more resale properties than in April 2019, Texas reports a 37% increase, and the Southwest region has 23% more homes available. These figures suggest a cooling trend in previously overheated markets.

In specific markets, this shift is evident. Austin, Texas, now has 91% more homes on the market than in 2019, with home prices declining by 2% year-over-year. Conversely, in Orange County, California, the inventory has decreased by 41% since 2019, yet property values have continued to rise by 5%, indicating a different set of market forces at play.

Construction Sector Responds to Market Shifts

The construction industry is also adjusting to these changes. In regions like Texas and Florida, where supply has outpaced demand, new-home inventories are at their highest levels since 2010. As a result, home prices are experiencing downward pressure. According to John Burns, builders are now slowing down construction activity to align with the softer sales environment, preventing further oversupply.

Sunbelt’s Demographic and Economic Momentum Remains Robust

While supply-side trends influence current market conditions, the long-term outlook depends heavily on migration patterns and employment growth. The Sunbelt states continue to attract residents, with cities like Jacksonville, Charlotte, and Raleigh-Durham remaining top destinations for newcomers. Meanwhile, traditional coastal hubs such as Los Angeles, New York, and Chicago are experiencing population declines, although international migration helps offset these losses.

Employment data further supports this regional divide. In April, Northern Florida experienced an annualized job growth rate of 1.4%, Texas saw a 1.3% increase, and the national average was 1.2%. In contrast, Southern California’s employment remained stagnant at 0%, and the Southwest region grew by only 0.1%. Notably, major Sunbelt metros like Dallas have surpassed pre-pandemic employment levels by 11%, whereas San Francisco’s job market remains 2% below its previous peak.

Market Overhangs and Future Growth Opportunities

Despite current oversupply issues in some markets, their long-term prospects remain promising. For example, Austin’s housing market has cooled due to excess inventory, yet the city’s population grew by 2.4% in 2024-three times the national rate-indicating strong underlying demand. Similarly, Orlando’s market has slowed, but its employment growth is nearly double the national average, suggesting a potential rebound in housing demand.

These contrasting trends underscore the importance of adopting a long-term perspective when evaluating real estate opportunities. As the report emphasizes, the fundamental drivers-job growth and population increase-continue to support the Sunbelt’s resilience, even amid short-term supply gluts. The current market conditions are a temporary phase, and the underlying economic fundamentals suggest a positive outlook for the future.