Phoenix leads nation for biggest decrease in days on market

 

By: AZ Big Media 

 

While home prices remained relatively stable year over year this October, limited inventory continues to hamper homebuyers as the number of homes actively for sale shrank on an annual basis (-2.0%) for the fourth month in a row, according to the Realtor.com^® October Monthly Housing Trends Report released today. However, inventory rose unseasonably (+5.1%) between September and October this year as mortgage rates exceeded 20-year highs and created additional headwinds for homebuyers. Tighter inventory means less time on the market and Phoenix leads the nation with a 14-day year-over-year drop in the number of days homes are spending on the market.

 

Notably, while home prices stayed flat, the share of price reductions, while down year over year, continued to grow on a monthly basis, indicating that home prices could potentially soften in the coming months.

In Metro Phoenix, the median listing price is $530,000, a 9.2% year-over-year increase. The number of active listings has dropped 39.3% and those Metro Phoenix listings are spending an average of 37 days on the market. That is a 14-day decrease in Phoenix for days on market from this time last year.

“The current housing market continues to challenge homebuyers and sellers alike, but we do see signs of adjustment,” said Danielle Hale, Chief Economist at Realtor.com^®. “While record-high mortgage rates are putting off many would-be buyers, decreases in both inventory and time homes spend on the market shows that some buyers are moving quickly to lock in rates before they can go any higher. Buyers did see some measure of relief in stable home prices this month, and we’ll be watching the rising share of listings with reduced prices to see how that impacts prices in the near future.”

What it means for homebuyers, sellers, and the housing market

Inventory down -41.8% below typical 2017 to 2019 pre-pandemic levels, still-climbing mortgage rates, and elevated home prices continue to deter potential buyers in October. To help offset scarce inventory and affordability challenges, many homebuyers are turning to affordable new construction, while those who choose to remain renters for longer are quickly absorbing more affordable new units coming onto the market.

A few relatively unusual monthly data points are worth watching, such as late-season growth in the inventory of homes for sale at a time when it would typically decline, along with the rising share of price reductions, which could signal a softness in prices in the coming months. Easing prices would be encouraging news for buyers, as much-higher mortgage rates compared to last October have increased the monthly cost of financing 80% of the typical home by roughly $166 (+7.4%) compared to one year ago, bringing it to a high not previously seen in Realtor.com^® data that stretches back to mid-2016. In practical terms, this means households looking to purchase the median-priced home in October now need an additional $6,600 in annual income ($120,000) compared to the same time last year.

“Because high mortgage rates, elevated home prices, and stubbornly low inventory make today’s housing market particularly challenging, many of today’s buyers are motivated by life changes, such as growing families, supporting elderly parents or grown children, or accommodating professional needs, from return to office mandates to relocation opportunities created by remote work,” said Realtor.com^®‘s Executive News Editor Clare Trapasso. “On a positive note, our data shows that home shoppers with flexibility in their location choices can still find affordable options this fall.”

Those trying to determine whether to make a move now or hold out for possible market improvement can tap into Realtor.com^® RealCost tools, including the Affordability Calculator. 

Phoenix days on market see big drop

The amount of time homes spend on the market is rising more slowly than usual during the fall season, as limited supply spurs homebuyers to act quickly and newly listed homes make up a greater share of low remaining inventory. Overall, homes in all regions spent less time on the market in October than during the same time last year.

• The typical home spent 50 days on the market this October, which is one day shorter than the same time last year and more than two weeks (-15 days) less than in the average October from 2017 to 2019.
• In the 50 largest metropolitan areas in the United States, the typical home spent 42 days on the market, which is two days less than in October 2022. Homes in large metros in the West spent four fewer days on the market year over year, three fewer days in the Northeast, one day less in the Midwest, and homes spent the same amount of time on the market compared to last year in the South.
• In 35 of the 50 largest metro areas this October, homes are spending less time on the market compared to last year, with time on the market decreasing the most in Phoenix (-14 days), Buffalo, N.Y. (-13 days) and Las Vegas (-11 days).
• Time on market increased in 16 of the 50 largest metros, including New Orleans (+9 days), and Nashville, Tenn. (+6 days). Among all large metros, only Los Angeles (+2 days) and Denver (+1 day) saw an increase in time on market compared to average 2017 to 2019 pacing.

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