BAM Key Details:
- The latest edition of the Realtor.com® Monthly Housing Trends Report shows buyers in January had more bargaining power.
- More home buyers looked to relocate in January, with 56% of listing views going to homes outside the home shopper’s current market.
- Midwest and Northeast metros with more affordable housing gained in popularity, with more online traffic from out-of-towners.
The latest edition of the Realtor.com® Monthly Housing Trends Report shows home buyers in January had more bargaining power—and a stronger inclination to use it.
Also, more home buyers are looking to relocate, with 56% of listing views on Realtor.com® going to homes outside the buyer’s current market. Metros in the Midwest and Northeast, in particular, are gaining in popularity as buyers shop for more affordable housing.
With mortgage rates falling to their lowest level in months and slowing home price growth, formerly benched home buyers are re-entering the market and enjoying the unique opportunity this market affords them.
Even better, the annual decline in new listings dropped to single digits in January—a strong indicator that more sellers are returning to the market (although even more sellers are needed to solve inventory issues).
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. 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.
Affordable Midwest and Northeast metros growing in popularity
Also released today, the Realtor.com® Q4 Cross-Market Demand Report shows the regional variations in home buyer activity and highlights the increase in buyers relocating in the face of persistent affordability challenges.
Over half (55.5%) of the listing views on Realtor.com®, across the top 100 metros in Q4 2022, went to homes outside the home shoppers’ current metros. This compared to 55% for the Q3 and 53.4% for Q4 2021.
Home shoppers in the West (63.0%) and Northeast (57.0%) were most likely to search markets outside their current metros last quarter, while Midwest and Northeast markets with more affordable housing gained in popularity among out-of-market shoppers, including—
- Pittsburgh, PA
- Buffalo, NY
- Syracuse, NY
- Albany, NY
- Cleveland, OH
Markets that saw the steepest declines in out-of-market online home shoppers:
- Austin, TX
- Seattle, WA
- Knoxville, TN
- Albuquerque, NM
- Ogden, UT
The decline in popularity for Phoenix and Los Angeles is likely due to the high financial costs associated with moving to these areas, especially compared to last year.
That lines up with Realtor.com®’s 2023 Housing Forecast, which projected steep annual sales declines for these two metros.
Active inventory grows with buyers still deterred by high rates and home prices
The number of active listings for January show continued growth as buyers still contend with higher mortgage rates and home prices. Less competition and more time on market have given buyers more options and more time to decide.
But while buyer activity has significantly increased this month, many are still waiting for mortgage rates to drop still further and for housing prices to fall, which is unlikely to happen on a broad scale with housing inventory under one million again.
Active inventory of for-sale homes grew 65.5% year over year in January, which is still 43.2% lower than before the pandemic (January 2017-2019).
Source: Realtor.com®
Meanwhile, numbers for pending listings (homes under contract with a buyer) and newly listed homes continued to drop.
Source: Realtor.com®
January’s decline in new listings is the smallest since July 2022. And the South saw an increase in newly listed homes. In fact, across the 50 largest U.S. metros, only the South saw an annual increase in new listings for January 2023—up 5.4% on average.
Twelve metros saw an uptick in newly listed homes compared to last year, up from only two metros last December.
All of these markets were in the South, with the biggest increases seen in—
- Raleigh, N.C. (+49.0%)
- Nashville, Tenn. (+45.3%)
- Austin, Texas (+24.9%)
Source: Realtor.com®
On average, both pending listings (-31.9%) and new listings (-5.4%) declined year over year.
That said, the drop in new listings is significantly lower than last month’s 21.0% drop and last November’s decline of 17.2%.
It’s also the smallest since last July’s decline of 6.8%.
Active inventory gains in 49 of the 50 largest metros
Active housing inventory grew in 49 of the 50 largest U.S. metros in January, with the biggest gains in—
- Nashville, Tenn. (+303.5%)
- Austin, Texas (+260.4)
- Raleigh, N.C. (+254.8%).
The only U.S. metro to see an annual drop in active inventory was Hartford, Connecticut (-8.0%).
Slower price growth gives buyers more time for decision making
The U.S. median listing price in January was $400,000, up 8.1% compared to January 2022 and almost identical to the previous month.
Source: Realtor.com®
Annual growth in the typical asking price stood at 8.1%, little changed from the previous month after six consecutive months of decelerating growth. The halting declaration suggests a possible slowdown in the normalization of home prices.
As the number of for-sale homes continues to climb, sellers in January were more than twice as likely as the previous year to reduce their home’s asking price.
The share of U.S. homes with price reductions grew year over year from 6.0% last January to 15.3% in January 2023, which is generally higher than before the pandemic but still a bit lower than 2019 levels (15.6%).
Source: Realtor.com®
Days on market for homes in January grew compared to last year, with homes in western markets waiting 12 more days for a buyer, compared to pre-pandemic times. But in all other parts of the country, homes are selling more quickly than in 2017 to 2019, on average.
Nationwide, the typical home lingered for 75 days on the market in January, up 13 days from last year but 16 days faster, on average, than in 2017–2019.
Source: Realtor.com®
In the 50 largest U.S. metros, the typical home spent 68 days on the market, up 15 days from January 2022. Forty-five of those 50 metros saw an increase in that number compared to a year ago, with the biggest increases in the following:
- Raleigh, N.C. (+41 days)
- Las Vegas (+40 days)
- Denver (+40 days)
Only three of the 50 metros saw a decline in days on market (suggesting two of them saw no change):
- Richmond, Va. (-20 days)
- Milwaukee (-8 days)
- Buffalo, N.Y. (-3 days)
The general trend of increasing time on market remained consistent across all areas of the country, with increases varying by region:
- West: +27 days
- South: +16 days
- Midwest: +7 days
- Northeast: +6 days
Top takeaways for real estate agents
While Realtor.com’s report focuses on national trends, data surrounding the inventory and home prices are extremely localized. The more familiar you are with the advantages in your local market for buyers and sellers, the better able you are to determine the smartest course of action for each one.
Don’t be afraid to look beyond the usual agent-client conversations if you see something that justifies a different approach—one that’s more likely to result in the best outcome for your client, even if it means you won’t be helping them buy or sell this time around.
Get to the heart of what your client wants and what they need, and focus on their long-term benefit to build trust and set them up for success.
