The housing market remained sluggish this week. The pace of price growth inched forward at a crawl, with an increase of less than one percent compared to the same period last year. Nevertheless, the persistently high housing costs and scarcity of available properties continue to present challenges for buyers. Limited inventory levels result in intense competition for fresh listings, adding to the budgetary pressures faced by prospective homeowners. Consequently, affordable housing markets remain in high demand, experiencing notable price growth as buyers flock into regions that still offer realistic opportunities for homeownership. Furthermore, to overcome the shortage of existing homes, buyers are increasingly drawn to new constructed homes as a viable alternative. However, unlike current homeowners who can leverage their near-record high home equity, many would-be homebuyers are compelled to postpone their purchasing plans due to high down payments and elevated mortgage rates.
Key Findings:
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The median listing price grew by just 0.8% over last year. Home price growth ticked up slightly this week but still at a crawl. While the national trend is helpful for understanding the broad context, local market trends are more important for individual decisions, and data show that these vary. In fact, the May Housing Trends report showed that median home listing prices in the Northeast were still up by double-digits over one year ago, while both the South and the West saw low single digits. This trend is consistent with findings showing that markets in the Northeast and Midwest continue to top our list of April 2023 Hottest Markets as their relative affordability continues to attract buyers.
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New listings–a measure of sellers putting homes up for sale–were down again this week, by 20% from one year ago. The number of newly listed homes has been lower than the same time the previous year for the past 47 weeks. This week’s gap was smaller than last two weeks’, but the lack of new sellers is still a drag on home sales. In fact, this trend holds for all four regions in May, and the West saw the most significant decline in listing activities. Existing homeowners, benefiting from mortgage rates considerably lower than current rates, are reluctant to list their properties, leading to a lag in new listings. Notably, investors, who have not been active sellers in the housing market since the mid-2000s (except during the early stages of the pandemic), experienced a faster decline in buying activity compared to selling in the latter half of 2022. If this trend extends into 2023, we could see investors contributing more new listings to the market.
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Active inventory growth slowed again, with for-sale homes up just 18% above one year ago. The number of homes for sale continues to grow, but compared to one year ago, the pace is slowing. As we have discussed previously, further slowing is likely ahead. Due to the limited housing inventory, many buyers have turned their attention towards newly constructed homes. In fact, the falling prices of new homes are making them even more appealing as affordability remains important for constrained buyers, resulting in an uptick in new home sales.
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Homes spent 13 extra days on the market compared to this time last year. For 45 weeks it’s taken longer to sell a home compared to the same week one year ago, with the gap exceeding two weeks since January.