More buyers returned to the housing market this spring as mortgage rates fell, but the lack of inventory and reduced affordability has tempered activity, according to a new report.
Realtor.com on Thursday released its Monthly Housing Trends Report for March, and said the recent six-month surge in active listings lost momentum, moderating to 59.9% year-over-year. In addition, time on market shrank to 54 days — from January’s high of 74 days — as buyers eased back into the market.
Still, the report cautioned, recent higher mortgage rates could freeze them back out.
“Signs show that buyers are active in the spring housing market, even if they aren’t as numerous as they were during the pandemic,” said Danielle Hale, chief economist for Realtor.com. “Amid fewer new choices on the market and still rising home prices, home shoppers have shown that they are very rate sensitive, only jumping back in the market when rates dip.”
She said that, “what happens with rates this spring will likely play a strong role in determining whether the housing market bumps along or picks up speed this year.”
“With so much built up equity,” Hale added, “home sellers are still faring well, but many are sitting on the sidelines. The usual seasonal pickup in buyer demand appears to be underway, one of several factors that make spring the best time to sell. With an uncertain market ahead, it may be even more important for potential sellers to aim for this year’s seasonal sweet spot.”
Get Ready To Sell
For homeowners planning to sell in 2023, now is the time to get ready, Realtor.com said. Its Best Time to Sell analysis predicts that, nationally, the week of April 16-22 will bring sellers the “best combination of market conditions this year, including higher home prices, fewer other homes for sale, a faster sale, and stronger demand.“
"Well-priced, move-in ready homes with curb appeal in desirable areas are still receiving multiple offers and selling for over the asking price in many parts of the country," said Realtor.com's Executive News Editor Clare Trapasso. "So this spring, it's especially important for sellers to make their homes as attractive as possible to appeal to as many buyers as possible.”
She added that homes priced too high, that are in need of major repairs, or that aren't presented professionally often sit on the market for longer and sometimes sell for under the initial asking price.
Inventory Up, But Still Low
The inventory of active listings continued to climb in March over last year’s lows, but the rate of growth cooled slightly from the brisk pace seen the previous two months, the report said.
With new listings remaining scarce in March, the rise in the number of homes for sale is a reflection of more time spent on the market compared to last year, rather than an influx of new sellers, it said.
A lack of new homes to the market continues to be a drag on sales; attitudes toward housing worsened in February, especially among potential sellers, which likely signals ongoing weakness in the number of new homes for sale this year, Realtor.com said. Higher interest rates continue to create affordability challenges for buyers, and fewer homes went under contract compared to last year.
The supply of active listings for sale rose 59.9% compared to this time last year, but is still 49.6% below pre-pandemic 2017-19 levels, on average. There were 211,000 more homes available to buy in March compared to a year ago.
Newly listed homes for sale continued to fall in March (-20.1%) compared to this time last year, a higher rate of decline than last month’s 15.9% decrease and 29.7% below pre-pandemic 2017-19 levels. Pending listings, or homes under contract with a buyer, declined year-over-year (-24.5%).
The number of homes for sale across the 50 largest metros was up 74.4% compared to a year ago. The South saw the highest growth in active listings (+127.4%).
Among the 50 largest U.S. metros, 47 markets saw active inventory increase compared to last March, with the most growth in Austin, Texas (+312.2%); Raleigh, N.C., (+273.7%); and Nashville, Tenn. (+253.3%). Only three markets had inventory declines on a year-over-year basis, including Milwaukee (-17.2%); Hartford, Conn. (-17.0%); and New York (-0.9%).
Price Increases Slowed
In March, national median list prices continued to rise year-over-year, but the rate at which prices rose slowed to the lowest level since June 2020, in the early months of the COVID-19 pandemic, Realtor.com said.
At that rate of slowing, list prices could decline relative to last year as early as this summer, following the recent national median sale price decline, which fell annually for the first time in 10 years last month, it said.
The share of homes with price reductions is up significantly from last year, but dipped below 2017–19 pre-pandemic levels in February and continued to decline in March, indicating that the smaller number of homeowners who are putting their homes up for sale appear to be readjusting their home price expectations to the realities of the current market.
The national median listing price was $424,000 in March, up from $415,000 in February. Annual list-price growth continued to slow to 6.3% over last year, the lowest growth rate since June 2020.
Among the 50 largest U.S. metros, the biggest annual listing-price gains continue to be in the Midwest, up 14.1% on average from last year. The metros with the biggest asking-price increases were Memphis, Tenn. (+40.3%), Milwaukee (+26.3%), and Kansas City, Mo. (+17.7%); however, in those metros the mix of inventory also changed and more larger, expensive homes are for sale today.
In March, 12.6% of active listings had their price reduced, more than double the 5.8% a year ago.
Nine out of the largest 50 markets saw their median list price decline in March. Large southern metros (+9.1 percentage points) continued to see the largest increase in the share of listings with price reductions, and the greatest year-over-year declines in the median list price were seen in Austin, Texas (-8.4% year-over-year), Las Vegas (-6.7%), and New Orleans (-5.1%).
Time On Market Increases
A typical home spent more time on market compared to last year, although after rising steadily from the summer of 2022, the usual seasonal pickup in the sales pace shrank the gap and homes sold faster in March than in January and February. That suggests buyers are active in the market, even if they are not as numerous as they were at this time last year.
Even though the typical home listing was on the market for more than two weeks longer than at this time last year, homes are still selling just over two weeks faster on average than before the pandemic boom.
In March, the typical home spent 54 days on market, 18 days longer than at this time last year, but 15 days faster than the pre-pandemic March 2017-19 average.
Across the 50 largest U.S. metros, time on market was lower in March relative to the national pace, 46 days on average, and was 16 days slower than March 2022.
Time on market increased compared to last year in all 50 metros, with the greatest increases in Raleigh, N.C. (+42 days), Kansas City, Mo. (+37 days), and Austin, Texas (+37 days).
