Buyers are entering a calmer housing market, but with little incentive for homeowners with sub 3% mortgage rates to sell and 50 of the 100 largest markets expected to see inventory declines, they will continue to have a limited number of homes from which to choose. Shoppers with some flexibility in terms of when and where they purchase may have a better chance of finding a home, according to the Knock Buyer-Seller Market Index released today.
According to the index, which analyzes key housing market metrics to measure the degree to which the nation’s 100 largest markets favor home buyers or sellers, the housing market has shifted dramatically over the past 12 months when none of the markets tracked favored buyers. In December 2022, 13 markets favored buyers, 43 were neutral, not favoring buyers or sellers and 44 favored sellers.
Despite a slight increase in home prices (+0.7%) from December 2021, homes sold at a lower price than the asking price in all but six of the 100 largest markets – Buffalo, New York; Hartford, Connecticut.; New Haven, Connecticut.; Rochester, New York; Springfield, Massachusetts and Syracuse, New York.
Median days on the market increased to 29, a full two weeks longer than a year ago. At year-end, there were a total of 354,000 homes for sale, an increase of 32.1% year over year, primarily as a result of falling sales, not the addition of new listings.
“We expect 2023 to bring more balance to the housing market, which is certainly good news for buyers following three years of intense competition,” said Knock co-founder and CEO Sean Black. At the same time, with inventory down nearly 42% from the start of the pandemic and no real incentive for sellers to move, finding a home you both like and can afford will remain a challenge. Those buyers with flexibility on where and when to move have an opportunity to find more homes for sale in some of the nation’s largest and most desirable housing markets beginning in the fall.”
The 10 markets where buyers will see more choices
If one thing is true about 2023, it’s that buyers will experience different scenarios based on their location. While inventory is expected to increase 17% across the nation, the number of homes available for sale is expected to decline in half of the largest 100 markets.
To find where it might be easier to buy, Knock looked at the markets where inventory is forecast to increase the most and when buyers will have the most options. The top 10 markets likely to see the biggest gains in for-sale homes in 2023 in rank order are: Salt Lake City; Dallas, Denver; Charlotte, North Carolina; Memphis, Tennessee; Las Vegas; Charleston, South Carolina; Colorado Springs, Colorado; St. Louis and New Orleans.
Inventory in these markets is forecast to increase throughout 2023, peaking in September, October and November. This means there will be more choices for buyers with flexibility to wait until the fall.
Inventory in the top 10 markets reached all-time lows during the pandemic. However, they did not see the same massive declines as the rest of the nation. In the three top markets – Salt Lake City, Dallas and Denver – inventory declined by approximately 20.3%, 34.3% and 19.9%, respectively, between December 2019 and December 2022.
Although low housing inventory has led to record high home prices over the past several years, the forecasted inventory growth won’t necessarily translate into home price declines. Only three of the markets – Salt Lake City, Las Vegas and New Orleans – are forecast to see price declines over the next 12 months. Six are projected to see prices rise with the median home price in St. Louis forecast to increase nearly 10% year-over-year.
Currently, only three of these markets – Colorado Springs, Colorado; Dallas and Las Vegas – favor buyers. By the second half of 2023, all but St. Louis, which will be in neutral territory, will favor buyers.