For almost a year and a half, the housing market has slowed to a crawl as inventory remained low and record-high mortgage rates scared off potential buyers. However, a new report from Redfin shows a subtle rise in new listings, which makes the first increase since July of 2022. And in certain affordable housing markets, listings are flying off the shelf in as little as eight days.
Are home listings picking up?
In the four weeks ending October 22nd, Redfin reported a 0.3% increase in new home listings compared to last year. While it might seem too small to celebrate, this is the first increase in listings in almost 18 months. The months of supply (a measure of housing inventory) also inched ahead by 0.2 points to 3.5 months of supply, which is the highest since February. While the figure is still a ways off from a balanced supply of 4 to 5 months, progress is progress.
Despite the subtle increases in home listings, buyers aren’t budging unless the deals are good. The near 30-year low in mortgage applications still indicates that buyers are waiting for conditions to improve more substantially before dipping a toe in the housing arena. With mortgage rates hovering around a 23-year high at 7.76% as of November 5th, and elevated home prices, it’s easy to see why potential buyers are still hesitant. However, buyers currently in the running for a new home might benefit from price drops.
As home prices climb across the country, higher-priced homes are sitting on the market longer while buyers opt for more budget-conscious options. In response, sellers are adjusting prices in yet another record-setting juncture. As of October 22nd, 6.8% of listed homes dropped their prices.
Which cities are bucking the trend and why?
Affordability remains a major concern for potential homebuyers in this high-rate environment. Markets with the fastest-selling homes typically have lower prices. In these five major housing markets, homes are going under contract in under two weeks on average. What’s making buyers snatch up these homes so quickly? They’re affordable and most fall under the national average home price of $412,081 except for Seattle, which surpasses the national average.
With people gravitating towards more affordable areas, competition for homes there is rising with it. Competition is also likely to bring price increases. Austin, TX is a prime example. The city gained popularity during the pandemic for its affordable housing and buyers purchased as quickly as possible while driving prices through the roof. Last Spring’s peak saw home prices of almost 30% more than the average home. Today, Austin is one of the slowest metro areas with a median of 59 days on the market, a Redfin study showed, and prices stretched ahead of the national average by over 9%.
