Home buying competition continues at a feverish pace as prices rise
Home buying competition shows no signs of slowing down so far in 2022, according to latest Realtor.com Housing Trends Weekly Report. As homes continued to sell faster than a year ago, asking prices accelerated to a double-digit pace and inventory remained tight.
After a period of steady growth of 8.5% to 9% in the fall, the median home listing price rebounded at a double-digit pace in December. In 2022, the price momentum has not only maintained, but has so far increased. Mortgage rates have risen half a percentage point over the past month, with investors expecting fed funds rate hikes to begin as early as next month.
Rising rates have led to a rush in new home sales as buyers try to sign contracts to lock in rates and avoid further cost increases. Realtor.com’s The 2022 housing forecast forecasts a slowdown in home price growth to single digits for the year as higher rates reduce the purchasing power of buyers, but the median price has yet to move in that direction.
New listings — a measure of sellers putting homes up for sale — were down 7% from a year ago.
In an inventory-strapped housing market, new home listings are a key indicator of future home sales. They indicate the number of sellers putting houses up for sale, ie the fresh supply. New listings ended 2021 on a somewhat flat note and trended below year-ago levels for 9 of the past 11 weeks. On a more optimistic note, however, the pace of decline has slowed considerably since the start of the year. If this trend continues, we could see growth in new listings over last year by March, just in time for the important spring home buying season. With the recent Realtor.com survey indicating that more owners plan to sell in the next 6 months and the construction of single-family homes continues at a rate of more than a millionthere are reasons to expect this trend to accelerate.
Active inventory continues to be insufficient and is down 28% from a year ago
With fewer new listings being added this week, buyer interest has once again exceeded new sales, and we are still seeing a significant gap in the number of homes actively for sale compared to last year. Although fewer homes for sale are creating challenges for buyers and sellers – many of whom will also be buying a home – it reflects strong buyer demand thanks to a booming job market that willunemployment below 4%.
Strong buyer interest cuts time to market by 12 days from last year
With fewer homes for sale now than this time last year, homes are selling faster and successful buyers need to act fast. For context, a typical home only spent 54 days on the market in Decemberfaster than the fastest month in any pre-pandemic year.
This market can be particularly difficult for first-time buyers who may be reluctant to fight. Cities a bit less competitive thanks to relatively more homes for sale like those in Realtor.com’s 2022 Best Markets for the first time home buyers report can provide a more manageable housing environment and be places young first-time home buyers want to call home. And with rents continue to rise at a double-digit pace and expected to outpace house price growth in 2022Realtor.com expects a lot of interest from hopeful first-time buyers in the coming year.