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.
Available inventory of homes for sale has likely bottomed for the season. With a tiny uptick in inventory over last week. As we move later into January the signals for the year start getting stronger. We’re hearing lots of anecdotes from realtors around the country reporting much healthier buyer interest than last fall. Of course last fall was about as quiet as can be. The question is whether those interested home shoppers actually choose to buy this spring.
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I’m Mike Simonsen, I’m the founder of Altos Research. Here’s what the data looks like for the second week of January 2023.
Available inventory of homes for sale ticked up just a tiny fraction this week to 473,000 single family homes. In early January it’s not uncommon for inventory to be at its seasonal low after the holidays, next week’s numbers should see a bigger increase as more homes get listed for the spring. In the last two years, the pandemic years, inventory kept falling all the way into March or even April. But as mortgage rates have risen from the pandemic ultra lows, buyer demand backed off and that allows inventory to build in January like previous normal years. The first of the spring market’s new listings arrive in January and inventory starts to build. This year there are not a lot of new listings and also not a ton of buyer demand so we’re just seeing a little inventory climb. Next week will see a bigger jump.
Home buyers will have an easier go of it this spring than they’ve had in the last couple years. But you can see here that January of 2020, we had 737,000 houses on the market. We have 36% fewer homes now available. I’ve said this a few times but I’ll repeat it here - there are no signs anywhere in the data that a big flood of new inventory is coming. Home buyers right now have limited competition, so you don’t have to fight for a home, but there’s also probably no reason to wait in hopes of some sudden better selection to arrive. Spring of course will bring more inventory and total inventory may climb closer to the pre-pandemic normal levels later in the year, especially if rates stay above 6.5% or in the 7s. But that inventory growth is not coming suddenly.
The new sales rate has also turned the corner for the season. We have 238,000 single family homes in contract right now. That’s up just a little from last week. The number of homes in pending status is very low right now, because this stat reflects buyer activity from last quarter. Homes can take 30 to 60 days or more in the contract process. We have 34% fewer homes in contract now than last year at this time.
And after the first of the year, better new listings start coming to market so home prices start their seasonal rise. This week the median price of single family homes rose just under 1% to $409,000. For the active listings that’s still plenty above last year at this time which is interesting to note. Last year’s bidding wars meant the ultimate sales price was higher than list and now we’re back to normal where sales price is a little under list price on average.
The median price of the new listings declined this week to $375,000 after last week's oddly big jump. I wouldn’t read too much into this. We have very few new listings each week so the median price may be a bit noisy.
The most important thing to take away is that the most bearish scenarios for home prices this year are not taking place. Sellers and listing agents know where the demand is and in aggregate they price to sell. So it’s early January, home prices are just starting to tick up in a normal seasonal pattern. If you have a buyer sitting on the sidelines waiting for a home price crash, in general across the country that’s not happening.
We can measure demand and the direction of future sales prices by looking at the percent of homes on the market with price reductions. This number frankly has been falling faster than I would have expected given how few buyers were out in the fall. 35.8% of the homes on the market have taken a price cut recently. This is a sign that sellers are not panicking, That smart properly priced listings are getting their offers. It’s also a signal that over priced listings have no chance. But I suppose that doesn’t need to be said. Does it?
This is of course national data and the local markets are behaving very differently from each other right now. If you need to get your local data to your buyers and sellers right now, you should join us at Altos Research. Go to AltosResearch.com and book time with our team to learn how to interpret the market signals for the people who need it most right now. They need you to be the expert for them.
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