According to the Realtor.com® October Monthly Housing Trends Report, home prices remained relatively stable year over year despite the ongoing inventory crunch. The number of homes actively for sale decreased by 2.0% annually for the fourth consecutive month. However, an unseasonal 5.1% rise in inventory from September to October this year has been observed, as mortgage rates hit a 20-year high, presenting additional challenges for homebuyers.
Interestingly, while home prices remained unchanged, the share of price reductions, though down year over year, continued to grow on a monthly basis. This suggests that home prices could potentially soften in the coming months.
October’s inventory remains 41.8% below pre-pandemic levels, with climbing mortgage rates and elevated home prices. This has led homebuyers to turn to more affordable new construction or to extend their rental periods in response to the scarcity of inventory and affordability issues. Additionally, data from October shows an increase in inventory and price reductions, hinting at a possible softening of prices for buyers.
The increasing mortgage rates have upped the monthly cost of financing 80% of the median-priced home by $166 (+7.4%). Consequently, buyers now require an additional $6,600 in annual income ($120,000) compared to a year ago. Nevertheless, home shoppers with flexible location preferences may still find affordable options this fall.
Nationally, pending listings declined by 7.6% compared to the same time last year, while new listings were down by 3.2%. The South was the only region to experience inventory growth of 3.3%, while 33 out of 50 of the largest metros saw a decline in active inventory by 6.7%. However, some Southern metros, including Memphis (+30.3%), New Orleans (+26%), and San Antonio (+20.6%), saw significant growth in active inventory.
Despite the stable listing prices, the share of price reductions continues to climb into the fall, which is not typical for this time of year. The national median list price decreased seasonally in October to $425,000. All regions have seen listing prices in larger metros increase on average, with Northeastern metros showing the highest growth. Los Angeles (+23.3%), Richmond, Va. (+14.5%), and Providence, RI (+13.7%) had the largest increases on a price-per-square-foot basis. However, five out of the 50 largest metros saw declines in median list prices: San Antonio, Texas (-2.2%), San Jose, Calif. (-1.3%), Memphis, Tenn. (-0.5%), Dallas (-0.2%), and Miami (-0.1%).
The percentage of homes with price reductions decreased nationally from 21.5% last October to 18.9% this October. Still, 13 out of the 50 large metros saw an increase in the share of price reductions, mostly concentrated in the South and Midwest regions, with St Louis leading at +4.2 percentage points followed by Oklahoma City (+3.4 percentage points), and Memphis (+3 percentage points).
Homes are spending less time on the market compared to last year, with an overall average of 50 days in October. In the 50 largest US metros, homes spent 42 days on the market this October, two days less than October 2022. In 35 of the 50 largest metros this October, homes are spending less time on the market compared to last year, with Phoenix having the greatest decrease (-14 days). However, time on market increased in 16 of the 50 largest metros, with New Orleans (+9 days) and Nashville (+6 days) having the greatest increases.
In conclusion, while the housing market continues to grapple with limited inventory and high mortgage rates, the increase in inventory and potential softening of prices offer a glimmer of hope for homebuyers. The shifting trends underscore the importance of staying informed and flexible in the current real estate environment.
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