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Weekly Housing Trends: Week of January 22, 2022

Weekly Housing Trends: Week of January 22, 2022

What this Week’s Data Means’s weekly housing data points to continued competitiveness in the market at the start of 2022 despite rising interest rates and double-digit home listing price growth. Homes are still spending over a week less on the market compared to a year ago and the gap isn’t showing any signs of shrinking. As consumers expect to see interest rates rise even further over the next year, some are accelerating plans to purchase to lock in lower rates. Rising rents are also factoring into buyer decisions; a largely fixed monthly housing payment is even more attractive when rents are rising rapidly. 

As homebuyers grapple with a challenging seller’s market, so far, fewer new sellers are listing homes compared to the same time last year despite rising interest in selling as sellers find themselves in the same inventory crunch as buyers. Looking forward, new construction strength could shift the cycle of low inventory more favorably but the market may also see some softening in demand as rising interest rates coupled with rising prices pose as headwinds later in 2022. 

Key Findings

The median listing price grew by almost 12 percent over last year

The median home listing price has trended at double-digit growth rates for the past 6 weeks, breaking out of the narrow 8.5 to 9.0 percent range seen for the previous four months before that. In the past week, the median home listing price growth rate hit above 11 percent for the first time since July 2021. Home prices continue to rise due to a mismatch between supply and demand, stemming from a decade-long shortage of homebuilding. However, given that housing affordability will be an increasingly important consideration for buyers, buying may be the relatively more affordable housing option in many areas across the country with rents rising by 19.3% and expected to increase a further 7.1% in 2022.

New listings–a measure of sellers putting homes up for sale–were down 8 percent from last year. 

New listings are among the more volatile housing data points we review each week, and this is especially true as housing activity is slow to re-ignite in the first few weeks of January after the holiday season. However, new listings have trended below previous year levels for 8 of the past 10 weeks. With fewer than half as many homes actively for sale now compared to 2 years ago, availability of for-sale homes is an ongoing challenge and potential limiting factor for home sales growth. Despite more homeowners planning to sell in the next 6 months and seller sentiment remaining high, sellers may put off listing homes if they cannot find homes to buy. However, single-family home construction continues at a 1 million+ pace, and it could be the key to breaking the cycle of low existing home inventory over the coming year.

Active inventory continues to fall short and is down 28 percent from a year ago. 

With fewer new listings added this week, buyer interest again outpaced new selling, and the gap in inventory continued to increase slightly. On the surface, this trend seems like it’s purely a buyer’s challenge, but notably, the majority of home sellers will also buy another home. Thus, buyer challenges can impact seller participation. In fact, more than 1 in 4 homeowners who are not planning to sell indicated that the reason holding them back is that they can’t find a new home in their price range.

Time on market was down 10 days from last year. 

With fewer homes for sale now than this time last year, a typical home spent just 54 days on the market in December, faster than any pre-pandemic year’s fastest monthOther research suggests that gaps are likely even larger in the competitive suburban housing markets that remained popular in 2021. This means buyers in today’s housing market still need to be prepared to act quickly even though time on market is longer than the spring and summer season. Buyers can focus their home search using online tools to personalize their results so they can act quickly on listings that are the best fit.