Where are prices heading?  Historically, less people list in November and December. With mortgage rates hovering at 7% and recovery from Ian just getting underway, I expect fewer sales. Inventory will continue its slow ascent as prices weaken.

It remains a seller’s market – a slight advantage. Forward looking indicators reflect a market more favorable to buyers than at any time since 2019. Average days on the market is rising, varying from 35 – 154 days based on location and price point (high-end market showing most weakness in price and days on market), and there are less showings.  The story of the past year were homes selling with multiple offers, at or over list price.  Those days are gone.  In September, the sold to original list price ratio was 93%.  Sold prices have plateaued. Although we will end the year with double-digit home price appreciation, the average list price is heading south – down 1.6% from last month,  down 8.5% from one year ago.  

Eventually, higher rates will kill demand. This year the Fed has raised its benchmark rate 5 times, from near zero in March to 3% – 3.25% today, with more to come.  In April, mortgage rates broke 5%.  It did not kill demand. It did put the brakes on. Inventory began to rise.  In May, months of inventory based on closed sales hit 1-month, still low but, highest supply since January 2021.  As the Fed quickened the pace of rate hikes, .75% in each of the past 3 months, faster than any time in recent history, in September inventory rose to a 2.3 month supply.  Still historically low, but in a 7% + rate environment, prices will adjust lower.

The paradox is that there are few new listings, (469 new resale single family listings this past month vs. 689 in August 2022 and 795 one-year ago), and transaction volume is even lower (404 sold resale single family homes this past month vs. 574 in August 2022 and 718 one-year ago).  Accordingly, although the supply of homes for sale is up, it’s a slow walk forward, still 40% lower than 2019 when the market was more traditionally balanced at a 4-month supply. Sellers will need to adjust their expectations and show some flexibility with buyers.

Homes that are priced correctly will continue to sell quickly.  Homes that are not priced right are effectively “not for sale”, just “for show”.  In a quickly shifting/evolving market, determining how to price your home for sale requires a learned statistical forward looking approach.  Anything less is a shot in the  dark.