– The housing market is currently unhealthy, with falling sales, rising home prices, and negative inventory year over year.
– The core problem is a lack of supply, with too many people chasing too few homes.
– Days on the market are still under 30 days, indicating a fast-paced market.
– Mortgage rates are at 8%, which will likely further weaken demand.
– Existing home sales dropped 2.0% in September compared to August and 15.4% year over year.
– Properties typically remained on the market for 21 days in September, up from previous years.
– Cash buyers are increasing, while first-time homebuyers are decreasing.
– Housing inventory increased slightly but is still down 8.1% from one year ago.
– The median existing-home sales price has increased by 2.8% year over year.
– Pricing data should be considered in the context of last year’s collapsing sales and declining prices.
– The future impact of 8% mortgage rates on housing pricing remains uncertain.
The savagely unhealthy housing market continues to unfold as we approach Halloween. Sales are still falling, home prices keep rising, and inventory is still negative year over year. The core problem? Too many people chasing too few goods — and days on the market are still under 30 days. On top of all that, mortgage rates are now at 8%. It’s like we invited Freddy Krueger, Jason and Michael Meyers to come for a haunted housing market party.
Let’s review what the existing home sales market has told us in 2023 as mortgage rates have increased.
From NAR: Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – waned 2.0% from August to a seasonally adjusted annual rate of 3.96 million in September. Year-over-year, sales dropped 15.4% (down from 4.68 million in September 2022).
Here is the breakdown of the key charts on the critical data lines as we go over what NAR has told us.
From NAR: According to the REALTORS® Confidence Index, properties typically remained on the market for 21 days in September, up from 20 days in August and 19 days in September 2022. Sixty-nine percent of homes sold in September were on the market for less than a month.
Days on the market rose year over year from 19 days to 21 days in September. The days on the market metric is very seasonal and we will see the typical seasonal increase now. However, in a regular market this number would be above 30 days. So, while we aren’t at a teenage level anymore, I still prefer the days on the market to be over 30 days.
In addition, cash buyers are up year over year from 22% to 29%. As fewer people finance their homes, the cash buyer percentage grows, especially in a declining sales environment. We can see the other result as first-time homebuyers have moved lower year over year from 29% to 27%.
From NAR: Total housing inventory registered at the end of September was 1.13 million units, up 2.7% from August but down 8.1% from one year ago (1.23 million). Unsold inventory sits at a 3.4-month supply at the current sales pace, up from 3.3 months in August and 3.2 months in September 2022.
So inventory is still down year over year; we saw a slight increase month-to-month on active listings and monthly supply. Monthly supply has the potential to grow more as higher mortgage rates can create more days on the market as homes take longer to sell. This data line can quickly get back to four-months’ supply, which I would look at as a regular marketplace nationally.
From NAR: The median existing-home sales price grew 2.8% from one year ago to $394,300, marking the third consecutive month of year-over-year price increases.
Home prices have been showing positive year-over-year growth and are still trending higher for the year. However, one thing to remember with the pricing data is that the comps are much easier now. We had collapsing home sales last year and month-to-month declines in home prices. So, consider this when we talk about year-over-year data now. The weekly Housing Market Tracker we produce each weekend will give you a more real-time outlook on current pricing in housing today. Always remember median sales price data is seasonal as well.
Today, we see the same trend for existing home sales continue as it has for many months, with sales and inventory both negative year over year. Going out in the future, we are dealing with 8% mortgage rates, which means demand will weaken. With three more reports left for the year, we will see how these higher rates impact housing pricing.
Property Chomp’s Take:
The housing market is in a state of chaos as we approach Halloween. Sales are plummeting, home prices are soaring, and inventory remains low. It seems like we’ve invited Freddy Krueger, Jason, and Michael Meyers to a haunted housing market party.
According to the National Association of Realtors (NAR), existing-home sales have fallen by 15.4% compared to last year. In September alone, sales dropped by 2.0%. This decline can be attributed to the fact that there are too many buyers and too few available properties. In fact, homes are being snatched up in less than 30 days on average.
The days on the market metric, which measures how long a property stays on the market before being sold, has increased slightly from 19 days to 21 days year over year. While this may seem like a small change, in a normal market, properties typically stay on the market for over 30 days. This indicates that there is still a high demand for homes, despite the declining sales.
Cash buyers are on the rise, accounting for 29% of all home purchases, up from 22% last year. This increase can be attributed to the declining sales environment, as fewer people are financing their homes. On the other hand, first-time homebuyers have decreased from 29% to 27%, further highlighting the challenges faced by buyers in this market.
Housing inventory remains a significant issue. While there has been a slight increase in active listings and monthly supply, inventory is still down by 8.1% compared to last year. The current supply is at a 3.4-month pace, indicating a seller’s market. However, higher mortgage rates may lead to properties staying on the market for longer, potentially increasing the supply in the coming months.
Home prices continue to rise, with a median existing-home sales price of $394,300, marking a 2.8% increase from last year. However, it’s important to note that the comparison is being made to a time when home sales were collapsing and prices were declining. The current pricing data should be viewed in the context of the market’s recovery.
Looking ahead, the housing market is likely to face more challenges with the recent increase in mortgage rates, which now stand at 8%. This will likely weaken demand and could impact housing pricing moving forward. With a few more reports left for the year, it will be interesting to see how the market responds to these higher rates.
In conclusion, the housing market remains in a precarious state. Sales are dropping, prices are rising, and inventory is still limited. The impact of higher mortgage rates is yet to be fully realized. As we navigate through this haunted housing market, it’s crucial to stay informed and closely monitor the trends and developments in the industry.