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After two years of unpredictability, fierce bidding wars and competition, things are finally looking a little more balanced for the U.S. housing market.
The national market moved further to favour buyers last month, entering neutral territory where neither buyers or sellers had the clear upper hand overall.
Markets that cooled the fastest in response to rising interest rates continued to moderate – meaning home prices dropped and listings stayed on the market a little longer than when the market hit its peak.
The shift toward buyers’ markets is being driven mostly by declining home sales. Over the nation’s 100 largest metros, only 127,000 homes were sold in October – a 51.4% decrease from this time last year, and a record low since November 2016.
“The housing market has borne the brunt of the Fed’s attempt to control inflation,” Sean Black, Knock Co-Founder and CEO, said. “At the same time, it has continued to demonstrate its resiliency. […] With interest rates stabilizing in recent weeks and less competition, buyers may begin to re-enter the market over the next few months, which could result in a return to a more normal spring home-buying market.”
Month’s supply exceeded two months in all top 10 buyers’ markets, except for Nashville, Tenn., where it stood at just 1.6 months. Las Vegas had the largest supply at 4.2 months.
In October, homes stayed on the market for an average of three weeks or more in the top buyers’ markets. In two of those markets – Boise City and San Francisco – prices fell by 3% year-over-year.
The largest shifts to buyers’ markets are occurring in markets that have remained historically neutral. However, local markets that lean more towards sellers show no signs of slowing down.
In October, six of the top 10 seller’s markets were in the South, three were in the Northeast, and one was in the Pacific Northwest. Although home prices in these markets continue to rise more than the national median sale price, three of the markets – Seattle, Greensboro and Portland have seen prices fall 10% or more from their peaks earlier this year.
In each of the top sellers’ markets, the number of homes for sale is limited, creating high prices and quick list-to-sale times. Competition in sellers’ markets remains fierce. In 13 sellers’ markets, homes spent less than 10 days on the market – in some, it was only 7 days.
According to data from the Knock Buyer-Seller Market Index, today’s top sellers’ markets will remain unaffected by the national trend of rising inventory and falling home prices well into 2023.
Fluctuations are normal in a market that is correcting itself, and despite gaining some momentum towards sellers in the spring, the largest 100 housing markets are forecast to move firmly into buyers’ markets as early as summer 2023.
By October 2023, 26 markets are forecast to be buyers’ markets, 38 will remain sellers’ markets, and 36 will be neutral.
Nationally, the median sales price is forecast to peak in June 2023 at $416,000 and fall to $410,000 in October 2023 – following a typical seasonal fluctuation.
As the national market levels out and inventory rises, median days on the market are forecast to rise to 28 days, and average sales prices are forecast to remain lower than the average asking price.
