What this Week’s Data Means:
On a positive note, new listings this week were higher than we saw at this time one year ago, the first uptick in eight weeks. Although it’s a contrast to monthly trends observed in September and October, it is consistent with our recent survey about homeowner plans which shows that a growing number of potential sellers are eager to find new homes. Many are seeking to meet family needs that have arisen in response to the pandemic while still others are looking forward to capitalizing on a housing market that still favors sellers.
With plenty of eager buyers in the market, many hoping to take advantage of the ongoing dip in mortgage rates, the increase in new sellers this week did not translate into an improvement in the total inventory of homes actively for sale. We are, however, seeing the usual seasonal increase in time on the market, and the gap in market speed also narrowed this week. Homes sold just 7 days faster than one year ago, the smallest gap since mid-March. As we lap last year’s incredible housing market rebound, we expect the gap in time on the market to shrink further. Nevertheless, the last year brought about such profound changes in the housing market that even in October–a typically slower month for housing–homes continued to sell faster than the fastest month in any previous year.
- The median listing price grew by 8.9 percent over last year. After an early-September uptick, home price growth has shifted back into the high single-digit territory and displayed consistency. Home prices have risen by 8.5% to 8.9% relative to one year ago in 14 of the last 15 weeks. Home prices continue to rise due to a mismatch between supply and demand, stemming from a decade-long shortage of homebuilding. This means that housing affordability will be an increasingly important consideration for buyers, but with rents rising by 13.6%, buying may be the relatively more affordable housing option for some.
- New listings–a measure of sellers putting homes up for sale–were up 5 percent from last year. New listings snapped a 7-week streak of declines. With fewer than half as many homes actively for sale now compared to 2 years ago, the availability of for-sale homes is a pain-point for buyers, and it’s going to take more than one good week to make up the gap. With our recent survey data suggesting that a growing share of homeowners are potential sellers, eager to find new homes there is reason to believe this may be the start of a new trend instead of a single good week.
- Active inventory continues to fall short and is down 23 percent from a year ago for the second week in a row. With new listings gaining this week, the improvement in the inventory gap held steady though we are still short of last year’s inventory. Active inventory reflects the combination of seller participation and ongoing homebuyer interest. With home buyers still actively buying up what’s for sale, as they did in September for both new homes and existing homes, we have to see the number of new sellers improving consistently, week after week, in order to keep closing the gap in active inventory.
- Time on the market was down just 7 days from last year. Homes continue to move faster than in previous years. In fact, the speed has improved so much that every week since mid-March has had a lower time on the market than the fastest-selling week in any year before this one. This means buyers in today’s housing market still need to be prepared to act quickly even as the fall gives buyers a few extra days to make decisions relative to what was common in spring and summer. 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.