HouseCanary Inc., a national brokerage, has released its latest Market Pulse report, showing that downward pressure on home prices continued in December largely due to reduced market activity and high interest rates as the for-sale inventory shortage persists.
December marked eight consecutive months of double-digit supply decreases, which would typically indicate that the market is relatively balanced for sellers and buyers. However, other metrics like number of days on the market and the sale-to-list-price ratio suggest that the current environment is beginning to lean towards a buyer’s market.
The sale-to-list price ratio stands at 96.9, which is the lowest observed since Q1 2019, and is expected to continue to decline. Additionally, the number of days on the market is currently at the highest level observed since early Q1 2020. And while for-sale supply decreases, single-family rental inventory is surging compared to the previous two years.
“The week between Christmas and New Years’ Day is typically the slowest week for housing market activity, but this year, we saw a multi-year low in both net new listings and contract volume,” says Jeremy Sicklick, co-founder and CEO of HouseCanary. “As we closed the year, December brought another month of double-digit contract volume decreases that triggered an additional month of price drops. With the most recent Fed minutes indicating rates to remain high throughout 2023, it is expected that housing market activity will continue to cool.”
For the month of December 2022, 90,222 net new listings were placed on the market, and 179,313 properties went under contract. This represents a decrease of 47.3% and 24.1%, respectively, versus December 2021.
The decrease in net new listings was driven by a 23.9% decrease in new listing volume as well as a 73.0% increase in removals compared to December 2021.
Median days on market stood at 53, up 26.2% from the prior year at 42 days on market. Days on the market is now at the highest level observed since early Q1 2020.
The sale-to-list-price ratio stands at 96.9 which is the lowest observed since Q1 2019 and is likely to trend further downward.
Price cuts are up 145.9% year-over-year but are down nearly 50% from their recent peaks occurring in September and October 2022.
Total single family rental inventory is up 95.3% from the same period in 2021, and up 103.8% from 2020.
Image: Erik Mclean on Unsplash