What this Week’s Data Means:
Indicators from home price growth to the change in active inventory and time on the market remain stuck in a narrow range relative to one year ago, neither heating up nor cooling down. Even the relatively variable new listings trend has been fairly steady in the last 7 weeks. The recent stability could indicate that the housing market is charting a relatively smooth transition from the unsustainably high level of activity to a more manageable long-run pace of growth.
We are seeing the usual seasonal slowdown in housing as we near the end of the year which creates better opportunities for buyers than the competitive spring and summer months. For sellers looking to make a sale before the end of the year, a well-priced home should attract attention, but the usual challenges of selling in the fall that were absent in 2020 are a factor this year. Sellers should note the trends in their market, keeping in mind that pricing is usually more favorable to buyers because there are fewer active now than in the spring and summer. Still, a rental market on the rebound with rents rising by 13.6% is a factor adding persistence to some first-time homebuyer searches.
- The median listing price grew by 8.6 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 13 of the last 14 weeks. Home prices continue to rise due to a mismatch between supply and demand, stemming from a decade-long shortage of homebuilding. While the rate of advance for the median home listing has slowed to half the pace we saw in spring, asking prices for typically sized single-family homes continue to increase at a double-digit pace. And home sales prices steadied or slowed in August data, but also remain near records. This means that housing affordability will be an increasingly important consideration for buyers, but so far, sales activity is continuing at a relatively high level. Pending home sales slipped slightly in September, but remain near 2021 highs. Additionally, a rental market on the rebound with rents rising by 13.6% is a factor adding persistence to some first-time homebuyer searches.
- New listings–a measure of sellers putting homes up for sale–were down 3 percent from last year. New listings have declined consistently in the last 7 weeks after gaining more often than not in the previous 5 months. 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. This means that the flow of homes coming up for sale has an outsized impact on the future trajectory of home sales. As the number of homeowners putting homes up for sale has slowed relative to last year, so has the recovery in active inventory, a reflection that buyers are still active.
- Active inventory continues to fall short and is down 23 percent from a year ago after seven weeks of a smaller gap. With new listings slipping again, the improvement in the inventory gap worsened after improving or holding steady for the last 7 months. Active inventory reflects the combination of fast-selling homes, slower new 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, it’s harder for active inventory to grow.
- Time on the market was down 8 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.