The housing market offered homebuyers greater bargaining power in January, as mortgage rates fell to their lowest level in months, inventory rose, and the growth in the typical asking price continued to slow, according to a new report from Realtor.com. However, several factors like high mortgage rates and median listing prices still create obstacles in the market.
Realtor.com’s Monthly Housing Trends Report for January found that nationally, the median listing price grew by 8.1% to $400,000, up 38.1% from last year. Active listings grew 65.5%, down 43.6% from last year, and new listings fell 5.4%, down 27.1% from last year. Median days on the market rose by 13 days to 75, down 12 days from last year. The share of active listings with price reductions grew by 9.3 percentage points to 15.3%, down 0.3 percentage points from last year. Lastly, the active inventory of homes for sale grew 65.5% year-over-year, but is still 43.2% lower than it was before the pandemic.
Key highlights:
- Across the top 100 metros, 55.5% of listing views on Realtor.com went to properties located outside of shoppers’ metro areas, compared to 55% during the previous quarter and 53.4% in the same time last year. Regionally, shoppers in the West (63%) and Northeast (57%) were mostly likely to search out-of-market.
- Markets in the Midwest and Northeast that offer more affordable deals gained the most popularity from out-of-market shoppers last quarter, including Pittsburgh, Pennsylvania; Buffalo, New York; Syracuse, New York; Albany, New York, and Cleveland, Ohio. Markets that saw the greatest decline in out-of-market home shoppers were Austin, Texas; Seattle, Washington; Knoxville, Tennessee; Albuquerque, New Mexico, and Ogden, Utah.
- Both pending listings, or homes under contract with a buyer (-31.9%), and newly-listed homes (-5.4%), declined YoY. The decline in new listings is much lower than last month’s 21% decrease and November’s 17.2% decrease, and the smallest decline since last July’s 6.8% decrease.
- Among the 50 largest metros, 49 markets posted yearly active inventory gains, led by Nashville, Tennessee (+303.5%); Austin, Texas (+260.4%), and Raleigh, North Carolina (+254.8%). The only metro to see inventory decline on a YoY basis was Hartford, Connecticut (-8%).
- On average across the 50 largest metros, only the South saw YoY new listings increase in January (+5.4%). Twelve metros saw the number of newly listed homes increase compared to last year, up from only two markets in December. All of these markets were located in the South, with Raleigh (+49.0%), Nashville (+45.3%), and Austin (+24.9%) seeing the greatest increases.
- Across the 50 largest metros, 45 metros saw an increase in time on market compared to the same time last year, with the greatest increases seen in Raleigh(+41 days), Las Vegas, Nevada, and Denver, Colorado (+40 days, respectively). Only three markets saw shrinking time on market, including Richmond, Virginia (-20 days), Milwaukee, Wisconsin (-8 days), and Buffalo (-3 days).
Major takeaway:
“Home buying in January remained relatively sluggish as sales slowed, inventories rose, and price growth leveled off. 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,” said Danielle Hale, Chief Economist for Realtor.com. “Even as inventories climb and prices moderate, homeowners have equity and advantages in the market but need to set their expectations accordingly. For renters looking to become homeowners this year our Best Markets for First-Time Homebuyers identified pockets of affordability across the country, particularly in the northeast, where they might be able to better overcome affordability challenges and find a better deal.”
For the full report, including more in-depth housing metrics on the 50 largest metros, visit https://www.realtor.com/research/january-2023-data/.
