Everyone knows that potential homebuyers are waiting for better affordability. But if demand for homes at current prices is down then why haven’t home prices fallen to meet the lower demand?
The short answer is that while homebuyer demand is indeed low, new supply remains very low, too. For home prices to adjust significantly, we need an imbalance of supply versus demand, and this market is surprisingly balanced.
To get the weekly picture about the housing market, watch the video above.
Don’t have time? Here are some quick takeaways from our latest data dive at Altos Research.
Inventory is up as homes sit for longer
As of Oct. 23, there were 554,000 single-family homes on the market. That’s up 1.5% from last week. Inventory is growing faster than last year at this time.
There were only 57,000 new listings of single-family homes unsold again this week. There are fewer sellers now than any recent year.
Housing supply shows no signs of easing
There were 325,000 single-family homes in the contract-pending stage, or 6% fewer home sales than last year. Meanwhile, we saw 55,000 new contracts for single-family homes this week. That’s 1,000 more sales than the same week last year.
Homebuyer demand is historically weak, but we don’t measure any precipitous further drop in demand even with mortgage rates now over 8%. What’s more, 38.5% of the homes on the market have taken a price reduction, and this will keep increasing.
Price cuts show balanced market is tilting slowly to supply
The median price of single-family homes in the United States is now at $435,000. Even though the demand indicators are weak, home prices have stayed reasonably stable, especially when compared to last year.
In fact, we’re seeing home-price gains of 1% to 2% over last year. We’ll see the median price of single-family homes going into contract each week ticking lower, but this is mostly seasonal as we head into the holiday season.
