Weekly Housing Trends View — Data Week Ending Jan 21, 2023

Our research team releases regular monthly housing trends reports. These reports break down inventory metrics like the number of active listings and the pace of the market. In addition, we continue to give readers more timely weekly updates, an effort that began in response to the rapid changes in the economy and housing as a result of the COVID-19 pandemic. Generally, you can look forward to a Weekly Housing Trends View and the latest weekly housing data on Thursdays with a weekly video update from our economists on Fridays. Here’s what the housing market looked like over the last week.

What this Week’s Data Means:

As we move into the new year, housing market data continues to suggest that buyers are relatively sluggish as the total number of homes for sale climbs higher and homes spend more days on market. These trends reinforce the lack of urgency buyers seem to have now that mortgage rates are no longer climbing, a sharp contrast to market sentiment that prevailed one year ago. As inventories climb, homeowners still retain many advantages, but nowhere near as unevenly as over the past few years. Meanwhile, buyers are gaining some negotiating power, but still face high costs. These realities plus the uncertainty of what lies ahead for mortgage rates, home prices, and the economy in general, have put market balance in no-man’s land, driving home sales transactions lower. We’ll continue to keep an eye out for signs that the stalemate is shifting. 

Key Findings:

• The median listing price grew by 7.3% over last year. Growth in the typical asking price of for-sale homes continued to slow as we move into 2023, continuing a trend that began in earnest as the trend hit double digits just shy of 20% in summer 2022. While December median list prices grew by single-digits for the first time in 12 months, 2023 data suggests that the normalization continues in price growth.

• New listings–a measure of sellers putting homes up for sale–were again down, this week by 5% from one year ago.  This marks the twenty-ninth consecutive week of year-over-year declines in homeowners listing their homes for sale, but this week’s decline was not only smaller than dip, the average decline in new listings so far this year is about half what we saw in the fourth quarter of 2022. As mortgage rates rose and the market shifted from a distinct seller’s market to one that might better be described as a nobody’s market, we saw homeowners retrench, and the number of new listings fell. Although the number of new listings is still declining, at the current pace we could see a reversal of that trend or more new listings than one year ago as soon as February. The most recent data on homeowner equity from the Fed show that despite the slowdown in home price growth, homeowners saw another record amount of wealth in their homes in the third quarter of 2022. Homeowners looking to make a move in 2023 may tap into this resource instead of borrowing as mortgage rates remain high.

• Active inventory growth continued to climb with for-sale homes up 69% above one year ago. In January, the housing market built further on the impressive growth seen in late 2022. But there is still room for more. Even after surging more than 50% in December 2022, the number of homes on the market trailed pre-pandemic counts by nearly 40%. After unprecedented urgency to find and close on a home in 2021 and 2022, buyers in today’s housing market are clearly operating under a different set of expectations and a much greater measure of patience. While this patience caused existing home sales volume to continue to decline in December, marking the 11th month of this trend, it has ushered in some advantages for home shoppers despite ongoing challenges. On the one hand, fresh home choices are still limited and costs are still higher as both mortgage rates and home prices continue to climb. On the other hand, however, competition is lower and increased time on market gives shoppers more options to evaluate on any given day than has been the case at this time of year since 2021.

• Homes spent 14 extra days on the market compared to this time last year. This is the twenty-sixth straight week that homes spent more time on market compared to the prior year. After years of operating at light speed, in December we saw time on market increase to what was typical at the same time of year in 2020. For context, the housing market at the time was already operating at a faster pace than we’d seen prior to the pandemic, but this is a marked slowdown from what has been the norm over the past few years. This slower market pace is a welcome relief to shoppers, particularly first-time homebuyers who are navigating what can be a daunting process even for experienced shoppers. Prospective buyers looking to purchase for the first time in 2023 who don’t have a particular location in mind might consider markets identified in our Best Markets for First-time Home Buyers as areas that offer a good mix of opportunity and affordability. Meanwhile, homeowners looking to sell in 2023 will want to be mindful of the slower market pace to set their expectations accordingly.

Data Summary: