The Realtor.com Monthly Housing Trends Report showed good news for American homebuyers – more bargaining power in the market as mortgage rates fell, inventory rose and asking price growth slowed.
However, there was no extraordinary growth in sales activity, hinting to a gap in the buyer-seller ratio on the market.
“Home buying in January remained relatively sluggish as sales slowed, inventories rose and price growth levelled off,” Danielle Hale, chief economist for realtor.com, said. “These trends reinforce that while buyers are gaining an advantage in the market, they are still being deterred by high home prices and financing costs. Even as inventories climb and prices moderate, homeowners have equity and advantages in the market but need to set their expectations accordingly.”
In January, the median listing price remained the same as it was in December ($400,000). This is the first time in the last six months that prices didn’t decline, suggesting a potential slowdown in price normalization.
However, homes tended to spend more time on the market, prompting more sellers to reduce their asking prices. Across the 50 largest metros in the United States, 45 of them saw an increase of time on the market compared to the same time last year.
As a result, the share of homes with price reductions increased to 15.3 percent, up from 6 percent in January 2022.
In the face of affordability challenges, many buyers turned their attention towards smaller markets outside of their current metro areas. Across the top 100 metros in Q4 2022, 55.5 percent of listing views on Realtor.com went to properties located outside of the shopper’s metro area – meaning Americans are moving further away to find affordable homes.
Pittsburgh, Buffalo, Syracuse, Albany and Cleveland were some of the most popular locations for out-of-market shoppers – mostly because these markets offer greater affordability and better deals for first-time buyers and renters looking to enter the market.
While the Midwest and Northeast are gaining favour with buyers on a budget, Western and Southern markets are becoming less popular for out-of-market shoppers due to high prices. Phoenix, Los Angeles, Austin, Seattle and Knoxville all saw lower sales levels at the start of 2023.
