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Sharp Decrease In Demand Driving Housing Market Cooldown

David Krechevsky
Oct 05, 2022
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HouseCanary Market Pulse reports finds big increases in home listings being removed, price drops.

KEY TAKEAWAYS
  • As housing demand dries up, volume of price drops are up 83.2% from September 2021.
  • Properties priced under $400,000 are underperforming in both net new listing volumes and contract volumes.
  • Declining demand led to a 19.2% decrease in new listing volume and 51% increase in listing removals.

As mortgage rates continue to rise, the housing market has seen a dramatic increase in home listings being removed and in the volume of price drops, according to a new report.

HouseCanary Inc., a national brokerage known for its real estate valuation accuracy, on Wednesday released its latest Market Pulse report covering 22 listing-derived metrics and comparing data between September 2021 and September 2022.

Throughout the past year, there has been a continued housing inventory shortage, driven most recently by recurring interest rate hikes as the Federal Reserve tries to battle rampant inflation. As a result, HouseCanary said, the post-pandemic housing market has shown a sharp turnaround, with many would-be buyers now deterred by record-high mortgage rates. 

As 2023 approaches, HouseCanary said its data indicate there will be additional market shifts, with a sharp decrease in demand that is causing sellers to reduce prices or remove listings at a dramatic rate.

According to the report, the volume of home listings being removed is up 51% in September from a year earlier, while price drops have risen 83.2% in that time.

“The most recent round of rate increases has continued to cause a shift in supply-demand fundamentals by impacting demand and creating a flat price-growth environment,” said Jeremy Sicklick, HouseCanary co-founder and CEO. “Compared to the rate increases in the spring, the market is starting at a different baseline, with no momentum to subsequently absorb the slowing of the market volume and price growth.”

Sicklick said the big increases in listing removals and price drops is driven by declining demand. 

“While the continued supply shortage remains significant, the recent round of increasing rates is taking a bigger toll than those occurring earlier this year,” he said. “The increasing rates are expected to continue to negatively impact the market, creating even lower contract volume and putting additional downward pressure on prices.”

Key highlights from this month’s Market Pulse:

Total Net New Listings:

Since September 2021, there have been 3,179,129 net new listings placed on the market, which is a 7.6% decrease from the previous 52 weeks.

Percentage of total net new listings over the last 52 weeks, broken down by home price:

  • $0-$200,000: 14.4%
  • $200,000-$400,000: 37.6%
  • $400,000-$600,000: 24.1%
  • $600,000-$1 million: 16.0%
  • >$1 million: 7.9%

Percent change in net new listing activity over the last 52 weeks versus the same period in 2021, broken down by home price:

  • $0-$200,000: -26.1%
  • $200,000-$400,000: -16%
  • $400,000-$600,000: +7.1%
  • $600,000-$1 million: +11.6%
  • >$1 million: +9.9%

Monthly Net New Listing Volume (Single-Family Detached Homes):

Monthly new listing volume was down 19.2% compared to Sept. 2021. In September, there were 236,971 net new listings placed on the market, representing a 29.6% decrease year-over-year

For the month of September, the percent change in net new listing volume compared to Sept. 2021, broken down by home price:

  • $0-$200,000: -36%
  • $200,000-$400,000: -32%
  • $400,000-$600,000: -25.3%
  • $600,000-$1 million: -24.7%
  • >$1 million: -23.2%

Listings Under Contract:

Over the last 52 weeks, 3,194,231 properties have gone into contract, representing an 11.1% decrease relative to the same period in 2021

Percentage of total contract volume since Sept. 2021, broken down by home price:

  • $0-$200,000: 15%
  • $200,000-$400,000: 38.3%
  • $400,000-$600,000: 23.3%
  • $600,000-$1 million: 15.3%
  • >$1 million: 7.6%

Percent change in contract volume over the last 52 weeks versus the same period in 2021, broken down by home price:

  • $0-$200,000: -23.6%
  • $200,000-$400,000: -18.3%
  • $400,000-$600,000: +1.4%
  • $600,000-$1 million: +4.7%
  • >$1 million: -1.4%

Monthly Contract Volume (Single-Family Detached Homes):

For the month of September, there were 284,611 listings that went under contract nationwide, a 18.9% decrease year-over-year. 

For the month of September, the percent change in contract volume compared to Sept. 2021, broken down by home price:

  • $0-$200,000: -21.1%
  • $200,000-$400,000: -21%
  • $400,000-$600,000: -14.7%
  • $600,000-$1 million: -15.5%
  • >$1 million: -21.3%

Median Listing Price Activity (Single-Family Detached Homes):

For the week ending Sept. 30, 2022, the median price of all single-family listings in the U.S. was $433,070, a 12.5% increase year-over-year.

For the week ending Sept. 30, 2022, the median closed price of single-family listings in the U.S. was $399,505, a 6.8% increase year-over-year.

The median price of all single-family listings in the U.S. is down by 0.7% month-over-month and the median price of closed listings has remained unchanged.

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