Homebuying Competition Continues to Cool Down, Realtor.com Reports
The U.S. housing market offered buyers more breathing room to make decisions in August, with the first year-over-year increase in time on market (+5 days) since June 2020, according to the Realtor.com Monthly Housing Trends Report.
Additionally, August home shoppers had more active listings to choose from than last year (+26.6%), even as new sellers continued to pull back.
“For many of today’s buyers, the uptick in for-sale home options is taking away the sense of urgency that they felt during the past two years, when inventory was scarce. As a result of this shift coupled with higher mortgage rates, competition continued to cool in August, with listing price trends indicating that home sellers are noticing shoppers tightening their purse strings,” says Danielle Hale, chief economist for Realtor.com. “As we soak up the last days of summer, the housing market is beginning to find more balance between buyer-friendliness and still favorable selling conditions.”
“Location also matters; our 2022 Hottest ZIP Codes show that competition for homes remains fierce in many markets in the Northeast, which was also the only region where inventory declined from 2021 levels in August,” adds Hale. “Regardless of where you live, it’s important to rate-proof your budget by contingency planning for various monthly housing cost scenarios, as mortgage rates will likely continue to fluctuate through end-of-year.”
In August, national time on market increased year-over-year for the first time in 26 months, and also grew in the vast majority of large metros. These trends reflect a housing market that is getting a refresh from the past two-plus years of frenzied buyer demand that outmatched supply, with inventory rising and more typical seasonality expected to return in the fall. It’s a long road to balance, with homes still selling more quickly than prior to COVID. However, relative to the market’s recent peak, August’s milestone shift in time on market trends is a step toward offering buyers relief from the relentless rush for homes.
In August, a typical home spent 42 days on market, five days longer than last year and the first increase since June 2020, but still 22 days faster than in 2017-2019, on average. Time on market was lower across the 50 largest U.S. metros (37 days, on average) relative to the national median, but also slowed from the August 2021 pace (+5 days) in the same markets.
Forty-eight of these metros posted yearly gains in time on market, with the biggest increases registered in Austin, Texas (+16 days); Raleigh, N.C. (+12 days); Riverside, Calif. (+11 days) ; Las Vegas, Nev. (+11 days) ; and Nashville, Tenn. (+10 days). Miami, Fla. (-9 days) and Richmond, Va. (-1 day) were the only two markets where time on market declined compared to last year.
National listing prices continued to grow by double-digits year-over-year in August, but the pace decelerated for the third month in a row. Until recently, asking prices kept accelerating due to the combination of still-high seller expectations and a shift in the mix of inventory to include more larger homes. However, data indicates that these trends are changing course, with listing prices per square foot also moderating. Even so, prices remain historically high and continue to rise more quickly than usual, which means affordability is still a challenge for buyers and that many homeowners are sitting on record-high levels of equity.
The U.S. median listing price was $435,000 in August, down from June’s record-high ($450,000), but still 36.9% higher than in August 2019. Compared to last month, listing price growth moderated year-over-year overall (to +14.3% from +16.6%) and on a square foot basis (to +13.2% from +15.5%). Among the 50 largest U.S. metros, August’s biggest annual listing price gains were in Miami, Fla. (+33.4%); Memphis, Tenn. (+25.8%); and Milwaukee, Wisc. (+25%).
Nationwide, 19.4% of active listings had their price reduced, a higher share than in August 2021 (11%).
In August, the number of for-sale homes with price reductions increased year-over-year in 49 large metros, led by Phoenix, Ariz. (+30.9 percentage points); Austin, Texas (+24.8 percentage points); and Las Vegas, Nev. (+24.4 percentage points). Milwaukee was the only market where the share of inventory with price reductions declined (-1.1 percentage points year-over-year).
With homes taking longer to sell and higher costs forcing more buyers to put plans on pause, active inventory continued to recover in August even as new listings declined. This reflects a reversal from earlier trends, as sellers had been fueling a run of inventory growth with freshly listed homes. However, seller sentiment has since shifted greatly, suggesting that today’s homeowners feel like they missed the boat on peak pricing, while others could be concerned about the cost of buying their next home. However, a new survey suggests that today’s seller-buyers have more bargaining power when it comes to terms like closing timelines, which could mean more flexibility to coordinate a purchase around their home sale. In fact, the share of sellers who accepted contingencies nearly doubled in the summer (41%) from the spring (22%).
On a typical day in August, the U.S. inventory of active listings grew 26.6% year-over-year, just shy of last month’s record-fast pace (30.7%). Aside from the Northeast (-2.4%), active inventory grew in all major regions, led by the West (+70.8%) and followed by the South (+56.3%) and Midwest (+6.5%).
Reflecting moderating demand as buyers face 61% higher monthly mortgage payments than last year, pending listings posted a bigger annual decline in August (-21.9%) compared to July (-19.4%).
New listings declined from August 2021 levels nationwide (-13.4%) and in 42 of the 50 largest markets, most significantly in San Jose, Calif. (-29.3%); Baltimore, Md. (-28.3%); and Washington (-27%). New listings grew in just eight markets, led by Nashville, Tenn. (+25.5%); Raleigh, N.C. (+14.4%); and Las Vegas, Nev. (+13.1%).
