Mike Simonsen is the founder and president of real estate analytics firm Altos Research, which has provided national and local real estate data to financial institutions, real estate professionals, and investors across the country for more than 15 years. An expert trendspotter, Mike uses Altos data to identify market shifts months before they hit the headlines.
Inventory is still on the rise each week. Our model had forecasted that inventory would tick up this week and it did. Next week will be a pivotal inflection point. That’s the week when the model assumes inventory can’t keep climbing so late in the year. But as of this week, inventory is at its highest point of the year. I’ve pointed out recently how dramatically buyer demand stopped in the first week of September when mortgage rates jumped from 5% to 6% and now 7%. Inventory which had plateaued for the year, started rising again at that time. So that’s what we want to keep a watch on. Is this week the peak of inventory? Or has home buyer demand stopped so completely that inventory will keep rising even as we approach Thanksgiving?
Every week Altos Research tracks every home for sale in the country. We analyze all the pricing, supply and demand, and all the changes in that data and we make it available to you before you see it in the traditional channels. If you aren’t using Altos market reports with your clients, your buyers and sellers, now might be the time to step up. Go to AltosResearch.com and book a free consult with our team. Because everyone is worried about what’s happening right now. They need you to help them see clearly. The data we cover here in these national videos is available for every zip code in the US. Join us to dive in. I’m Mike Simonsen, I’m the CEO of Altos Research. Here’s what the data looks like for the week of October 17 2022
Real Estate Inventory
We’ll start today with the week by week forecast for inventory growth. We’re projecting this week is peak inventory for 2022. There has been no time in the last decade where inventory was still growing by the end of October. As the holidays approach, significantly fewer homes are on the market. Even if the house doesn’t sell, it often gets withdrawn rather than just sitting with no attention. It’s a very reliable seasonal pattern.
So that reliable historical seasonal pattern is what we’ve based this on for this projection. 2018 showed us how late in the year inventory can grow. Even though demand is way down, It’s hard to imagine we have net MORE SELLERS as we step closer to Thanksgiving week. Of course, 2020 taught us that the reliable seasonal patterns can be broken.
The question is: how completely has housing demand been shut down? We’ll revisit this forecast each week. And maybe learn how counter-seasonal this year could become. As of right now the model projects 486,000 single family homes on the market at the end of the year.
This week there are 566,000 single family homes unsold on the market. That’s up less than 1 percent from last week. Inventory is 33% higher than last year at this time and still 40% fewer than 2019.
Home prices ticked down as expected this week. The median price for single family homes in the US is now $430,000. That’s down almost 1% from last week. If you’ve been paying attention each week, you’ll recall that home prices will end the year closer to $400k and then normally would resume climbing in the spring. You can see where we are in the annual seasonal curve and how as inventory falls through the end of the year, prices fall too. If rates stay close to 7%, it’s hard to imagine how prices will do that next spring.
Home Price Reductions
Checking in on price reductions, we can see that mid October is also typically the peak there too. As fewer homes are on the market in the fall, more homes are withdrawn, the percentage that have had price cuts starts falling dramatically too. A few more weeks before the percentage of the market with price reductions starts falling. This will really be a function of those with the least interest being pulled over the holidays. One factor that bears watching this year are the iBuyers. The companies like Open Door and Offerpad have a lot of inventory, a lot of which is being listed below what they paid for it a few months ago. The iBuyers had significantly less market share in 2019. And as sellers they may behave differently than individual homeowners. For example, do they keep their properties listed over the holidays? These are new dynamics that bear watching this year.
These local dynamics are why if you need to help buyers and sellers understand what’s happening in the market right now, I encourage you to go to AltosResearch.com and book time with our team for a free local consultation. People desperately need to understand what’s actually happening in the market and they need you to help them make the right decisions.
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Thanks, and see you next week.