The housing market is shifting closer to buyers preference

The housing market moved more in the direction of buyers last month, as markets that cooled faster in response to higher interest rates and house prices continued to moderate, according to the Knock Buyer-Seller Market Index released today. At the same time, many of the strongholds show no sign of slowing down and some are expected to gain momentum over the next year.

The index, which analyzes key housing market metrics to gauge the degree to which the nation’s 100 largest markets prefer home buyers or sellers, showed that the housing market entered no-man’s-land last month — the first time since July 2020 that neither buyers nor sellers got the upper hand. All but one market — Fayetteville, North Carolina — has moved at least marginally toward favoring buyers over the past 12 months, a trend that will continue over the next year. In October, 51 markets were sellers’ markets, 39 were neutral and 10 were buyers’ favorites.

The shift toward buyers’ markets was driven by a number of key housing market metrics, most notably declining home sales. Only 127,000 homes were sold in the 100 largest housing markets in October, down 51.4% from 262,000 a year earlier and the lowest record in any month since November 2016, according to the Knock’s Buyer-Seller Market Index. The median home price was $388,000, compared to $360,000 a year ago, while the average number of days on the market rose to 19, up a full week from October 2021.

The average sale-to-list ratio, which measures how close homes are selling to the 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 Sean Black, co-founder and CEO of Nook. Meanwhile, she continued to show her resilience. Despite the move into neutral territory, sellers still have an advantage in the majority of the nation’s largest metro areas, and many will continue to favor sellers through 2023. With interest rates flat in recent weeks and competition reduced, buyers may start stepping in again in the next few months. Coming, which may lead to a return to a more normal home buying market in the spring.”

Vendor markets are preparing to heat up further

The biggest movements driving the housing market’s shift to buyer preference are occurring in more buyer-friendly, neutral markets. By contrast, strong seller markets are declining at a slower pace, holding steady in seller territory, or even heating up again in terms of some key housing metrics.

In October, six of the 10 largest 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 sales price, three of the markets – Seattle; Greensboro, North Carolina; and Portland, Maine – Prices have fallen 10% or more from their peak earlier this year.

In each of the best-selling markets, the number of homes for sale is limited, which either drives up sale prices or results in an accelerated sale listing time frame. Homes in Rochester, New York sold for 7% above demand — the highest of any major housing market — in October.

Sellers in Hartford, Connecticut, and Portland, Maine, had home insurance premiums of 102% and 101%, respectively. Sellers in these markets sell their homes more quickly than in most other large markets; Homes in 13 markets are from sellers who have been on the market for less than 10 days. In Portland, the home spent an average of seven days on the market, while in Greensboro, Winston-Salem, and Fayetteville, North Carolina, it took eight days.

According to the index, best seller markets will be immune to the national trend of rising inventory and slowing or declining home prices through 2023. Seven of the top 10 seller markets along with the number of homes assigned to them are expected to be declining inventory. Sell ​​in Fayetteville (-26.1%); Hartford (-10.7%) and Columbia, South Carolina (-10.5%) contracted by double digits. Average selling price is expected to increase by 10% or more in four of the top 10 sellers’ markets – Greensboro (13.3%); (Columbia, South Carolina (13.2%); Savannah, Georgia (11.1%) and Little Rock, Arkansas (10.0%). Average sales will remain above or level with list prices in five of the top 10 best-selling markets—Fayetteville, North Carolina; Winston-Salem, North Carolina; Hartford, Connecticut; Rochester, New York; and Portland, Maine.

Here is where buyers have the luxury of time, and more choices

View-of-the-month exceeded 2 months in all of the top 10 buyer markets, except for Nashville, where it was just 1.6 months. The Las Vegas bid, the seventh-best market for buyers in October, was 4.2 months out, the largest of the 100 residential markets included in the index.

In October, it was normal for a home to stay on the market for three or more weeks in the top ten buyers’ markets. In Phoenix, the nation’s largest buyer’s market, a typical listing took 34 days to sell, while Columbus, Ohio, led the country in market days at 44. Prices fell year-over-year in two of the 10 buyer-friendly 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, Texas (3.5%); Ogden, Utah (3.5%) and Crestview, Florida (2.6%).

The average sell-to-ask price ratio fell to remain below 100% in all buyers’ markets in October except for San Francisco, where the average sell-to-ask rate still exceeded the ask price by 1% — one of the highest sell-to-price ratios, but it also Decreased dramatically from October 2021, when a typical home sold for 7% more than the list price in the San Francisco area.

The housing market is expected to approach equilibrium by October 2023

Despite gaining some momentum toward sellers in the spring, the top 100 residential markets are expected to move aggressively into the buyers’ market area as early as summer 2023. By October 2023, buyers’ markets are expected to be in 26 markets (up from 10 in October). (2022), 38 markets will remain seller markets (down from 51), and 36 will be neutral.

This shift is driving an 8.5% decline in home sales and a 16% increase in inventory over the next 12 months. Nationally, the median sales price is expected to peak in June 2023 at $416,000 and decline to $410,000 in October 2023, up 5.6% from October 2022. This follows a typical home selling season.

Average market days are expected to increase to 28, while average selling prices across the country are expected to remain below the average asking price in each of the next 12 months.

The housing stock is expected to grow in all but a few markets, pushing supply months from 1.9 months in October 2022 to 3.4 months in October 2023. A balanced market is considered to be somewhere between four and six months of supply. The rebound in months of supply is the first time the market has approached equilibrium since April 2019, when supply peaked at 3.7 months.