The housing market shifted more towards buyers last month as the markets that cooled fastest in response to rapidly rising interest rates and house prices continued to moderate, according to the Knock Buyer-Seller Market Index released today. At the same time, many strongholds show no signs of slowing down and some are expected to gain momentum over the next year.
The index, which analyzes key housing market metrics to measure the extent to which the nation’s 100 largest markets favor home buyers or sellers, showed the housing market entered neutral territory last month – the first time since July 2020 that neither buyers nor sellers had the upper hand. All but one market – Fayetteville, North Carolina – has moved at least marginally into buyers’ favor over the past 12 months, a trend that will continue into next year. In October, 51 markets were sellers, 39 were neutral and 10 favored buyers.
The shift to buyers’ markets is being driven by a number of key housing market metrics, including declining home sales. Just 127,000 homes were sold in the 100 largest housing markets in October, down 51.4% from 262,000 a year earlier and an all-month high since November 2016, the start of the Knock’s bid-ask market index. The median home price was $388,000, down from $360,000 a year ago, while the average days on market rose to 19, up a full week from October 2021 .
The average listing sale ratio, which measures how well homes are selling relative to their asking price, was 99% in October, unchanged from September and down from 101% a year ago.
“The housing market has borne the brunt of the Fed’s attempt to control inflation,” said Knock co-founder and CEO Sean Black. “At the same time, he continued to demonstrate his resilience. Despite the move into neutral territory, sellers retain the advantage in the majority of the country’s largest metros, and many will continue to favor sellers well into 2023. With interest rates stabilizing in recent weeks and less competition , buyers may begin to re-enter the market. market over the next few months, which could lead to a return to a more normal spring home buying market.
Sellers’ markets are expected to heat up further
The biggest moves driving the shift in the housing market toward buyers’ favor are occurring in neutral, more buyer-friendly markets. Strong sellers’ markets, on the other hand, are cooling at a slower pace, remaining firmly in seller territory, or even warming up again in terms of some key housing metrics.
In October, six of the top 10 selling markets were in the South, three in the Northeast and one in the Pacific Northwest. Although home prices in these markets continue to rise more than the national median selling price, three of the markets – Seattle; Greensboro, North Carolina; and Portland, Maine – have seen prices fall 10% or more from their highs at the start of the year.
In each of the best sellers’ markets, there are a limited number of homes for sale, which drives up sale prices or leads to a quick time to sell. Homes in Rochester, New York, sold 7% above demand — the highest of any major housing market — in October.
Sellers in Hartford, Connecticut and Portland, Maine have ordered premiums for their homes of 102% and 101%, respectively. Sellers in these markets sell their homes faster than in most other major markets; homes in 13 sellers’ markets spent less than 10 days on the market. In Portland, a home spent an average of seven days on the market, while in Greensboro, Winston-Salem and Fayetteville, North Carolina, it was eight days.
According to the index, today’s best sellers markets will be sheltered from the national trend of rising inventories and slowing or falling home prices until 2023. Inventories are expected to decline in seven of the top 10 sellers’ markets with the number of homes for sale in Fayetteville (-26.1%); Hartford (-10.7%) and Columbia, South Carolina (-10.5%) fell by double digits. The median sale price is expected to increase by 10% or more in four of the 10 best seller markets – Greensboro (13.3%); (Columbia, SC (13.2%)); Savannah, Georgia (11.1%) and Little Rock, Arkansas (10.0%). Average sales will remain at or above list prices in five of the top 10 selling markets: Fayetteville, North Carolina; Winston-Salem, North Carolina; Hartford, Connecticut; Rochester, New York and Portland, Maine.
This is where buyers have the luxury of time, more choices
Monthly supply topped two months in all of the top 10 buyer’s markets except Nashville, where it was just 1.6 months. Las Vegas, the seventh-best buyer’s market in October, had 4.2 months of supply, the largest of the 100 housing markets included in the index.
In October, it was normal for a home to stay on the market for three weeks or more in the top 10 buyer’s markets. In Phoenix, the nation’s main buyer’s market, a typical listing took 34 days to sell, while Columbus, Ohio, led the nation in days on market at 44. Prices fell year on year. the other in two out of 10 buyers. markets: Boise City, Idaho (-3.7%) and San Francisco (-3.3%). Year-over-year sales growth did not keep pace with the national average of 7.8% in six of the 10 markets: Salt Lake City (7.7%); Las Vegas (5.3%); Phoenix (5.2%); Austin, TX (3.5%); Ogden, Utah (3.5%) and Crestview, Florida (2.6%).
The average sale-to-ask ratio declined to stay below 100% in all October buyer’s markets except San Francisco, where the average sale still exceeds the asking price by 1% – the one of the highest sales-to-price ratios, but also down considerably from October 2021, when a typical home sold for 7% above list price in the San Francisco area.
The housing market is expected to approach equilibrium by October 2023
Despite some momentum toward sellers in the spring, the 100 largest housing markets are expected to settle firmly into buyer’s market territory by summer 2023. By October 2023, 26 markets are expected to be buyer’s markets (compared to 10 in October 2022), 38 markets will remain sellers’ markets (instead of 51) and 36 will be neutral.
The drivers of this change are an 8.5% decline in home sales and a 16% increase in inventory over the next 12 months. Nationally, the median sale price is expected to peak in June 2023 at $416,000 and drop to $410,000 in October 2023, a 5.6% increase from October 2022. This follows a season typical of home sales.
Median days on the market are expected to increase to 28 days, while average selling prices across the country are expected to remain below the average asking price in each of the next 12 months.
Housing inventory is expected to increase in all but a handful markets, pushing months of supply from 1.9 months in October 2022 to 3.4 months in October 2023. A balanced market is considered between four and six months of supply. ‘offer. The recovery in months of supply is the first time the market has approached equilibrium since April 2019, when supply peaked at 3.7 months.
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