Key Findings:
The median listing price grew by 9.5% over last year. Growth in the typical asking price of for-sale homes slowed further this week. In fact after 49 straight weeks–nearly a whole year–at double-digit pace, the growth in the median price among homes for sale fell back to single-digits. This was not a major reduction, as the price would still round to double-digits if we removed the decimal point, but it marks a significant slowdown from peak growth earlier this year when listing prices were growing at nearly 18% year over year pace.
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New listings–a measure of sellers putting homes up for sale–were again down, this week by 16% from one year ago. This marks the twenty-third consecutive week of year-over-year declines in homeowners listing their home for sale, and the decline was much bigger than last week’s smallest decline since July. Even though both buyer and seller confidence ticked up slightly in November, this week’s data suggests that fewer buyers and sellers acted on housing market plans in the last week.
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Active inventory growth held steady with for-sale homes up 55% above one year ago. Inventory growth climbed higher this week after last week’s first pause in eight weeks. As new listings dwindle, rising inventory signals that the pull back in demand is even larger. Today’s home shoppers have the benefit of mortgage rates that are three-quarters of a point lower than early November’s high thanks to recently favorable inflation readings. Whether mortgage rates continue to ease or begin to climb again, remains to be seen. Our expectation for 2023 is that rates will climb higher before falling in the second half of the year. The acknowledgement in the December Fed meeting that there is still more to do to rein in inflation suggests short-term rates will remain elevated higher for longer than previously expected which provides upward pressure on mortgage rates. However, the fact that the Fed’s forecasts may finally be aligning with actual inflation could mean fewer upward revisions to the inflation outlook ahead, which would be a positive for mortgage rates.
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Homes spent ten extra days on the market compared to this time last year. This is the twentieth straight week that homes spent more time on market compared to last year. A still robust jobs market is pushing up incomes but not by quite as much as inflation. Thus, home shoppers are taking longer to consider how to most effectively leverage their smaller purchasing power amid a growing number of options. As a result, homes are sitting on the market for longer. Homes are still selling faster than was common before 2019, but notably slower than last year when mortgage rates were less than half their current level. Homeowners seeking to sell in this market will need a dose of patience to go along with a smart pricing strategy that takes local market conditions into account.