Home sellers are in the driver’s seat as buyers contend with fierce competition.
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Home buying competition is showing no signs of slowing down so far in 2022, based on the latest Realtor.com Weekly Housing Trends Report. As homes continued to sell more quickly than last year, asking prices accelerated at a double-digit pace and inventory remained limited.
After a period of steady 8.5 to 9% growth in the fall, the median listing price for homes ratcheted back up to a double-digit pace in December. In 2022, not only has price momentum held, so far it has increased. Mortgage rates have risen half a percentage point in the last month as investors anticipate Fed funds rate hikes to begin as soon as next month.
Rising rates have driven a rush on new home sales as buyers try to sign contracts to lock-in rates and beat further cost increases. Realtor.com’s 2022 Housing Forecast expects a slowdown in home price growth to low-single digits for the year as higher rates reduce homebuyer purchasing power, but the median list price hasn’t yet moved in that direction.
New listings–a measure of sellers putting homes up for sale–were down 7% from last year.
In a housing market short on inventory, new home listings are a key indicator for future home sales. They indicate the number of sellers putting homes up for sale, in other words fresh supply. New listings finished 2021 on a somewhat flat note and have trended below previous year levels for 9 of the past 11 weeks. On a more optimistic note, however, the pace of decline has shrunk notably since the start of the year. If this trend continues, we could see growth in new listings relative to last year by March, just in time for the important spring home buying season. With Realtor.com’s recent survey indicating that more homeowners plan to sell in the next 6 months and single-family home construction continuing at a 1 million+ pace, there are reasons to expect this trend to gain momentum.
Active inventory continues to fall short and is down 28 percent from a year ago
With fewer new listings added this week, buyer interest again outpaced new selling, and we still see a sizeable gap in the number of homes actively for sale relative to last year. Although a smaller number of homes for sale creates challenges for buyers and sellers–many of whom will also be buying a home–it is a reflection of strong buyer demand thanks to a roaring labor market that has unemployment below 4%.
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Strong buyer interest drives time on market down 12 days from last year
With fewer homes for sale now than this time last year, homes are selling faster and successful buyers have to move quickly. For context, a typical home spent just 54 days on the market in December, faster than any pre-pandemic year’s fastest month.
This market can be especially challenging for first-time buyers who may hesitate to contend. Somewhat less competitive cities thanks to relatively more for-sale homes such as those in Realtor.com’s 2022 best markets for first-time home buyers report can provide a more manageable housing environment and be places young first-time buyers will want to call home. And with rents continuing to rise at double-digit pace and expected to outpace home price growth in 2022, Realtor.com expects plenty of interest from hopeful first-time buyers in the year ahead.