Inventory rising in nearly every major metro
A Realtor.com report found the number of homes for sale was up significantly year-over-year in December, but still well below pre-pandemic levels.
- Inventory rose in 49 of the 50 metros analyzed.
- Annual home price increases dropped into the single-digit range.
- A separate ATTOM report found an increase in foreclosures, but levels remain fairly low overall.
While elevated mortgage rates and home prices are keeping potential buyers on the sidelines, it appears the market is working its way back to more normal inventory levels.
In its December housing trends study, Realtor.com found the number of active homes on the market in December was up 54.7% compared to the same period a year ago, a time when activity was especially hot. Inventory still remained well below pre-pandemic levels, down 38.2% compared to the average levels seen in December 2017-2019.
Among the 50 largest U.S. metros, 49 saw yearly active inventory gains in December. The largest increases were in Raleigh (up 226.2%), Nashville (up 226%) and Austin (up 186.6%). Only Hartford, Connecticut (down 7.7%) saw a year-over-year decline in the number of for-sale homes.
Affordability will remain the key issue as many potential buyers and sellers figure out whether it is worth getting back into the market, said Danielle Hale, chief economist at Realtor.com.
"Although demand has softened compared to last year… moderation in home price growth may encourage more buyers to return to the market in the months ahead, and may also be welcome news for sellers aiming to sell and buy at the same time," Hale said in a news release accompanying the data.
Prices still well above pre-pandemic levels
While price growth has slowed, home prices remain significantly higher than they were before the pandemic. According to the report, the median listing price last month was up 33.4% from December 2019. Year-over-year, prices were up by a more modest 8.4%. It's the first time in 12 months that the annual price increase was in the single digits, according to the report.
The biggest annual listing price gains were in Milwaukee (up 46.2%), Memphis (up 34.0%) and Miami (up 20.4%).
Listing prices declined in nine markets, led by New Orleans (down 4.4%), Denver (down 4%), and Austin (down 3.4%).
While the typical home stayed on the market 67 days in December — 11 days longer than a year prior — homes still sold 16 days faster compared to pre-pandemic averages.
Cities with the biggest year-over-year increases in days on market were Raleigh (up 36 days), Phoenix (up 34 days) and Las Vegas (up 33 days). In the five metros where days on market declined compared to last year, the biggest decreases were seen in Milwaukee (down 16 days) and New Orleans (down 5 days).
Foreclosures up year-over-year, but most borrowers have positive equity
In a separate report released by ATTOM on Jan. 12, foreclosure activity was up in 2022 compared to the previous year, but down 34% when compared to the pre-pandemic year of 2019.
The report also found lenders repossessed 42,854 properties through foreclosure in 2022, up 67% compared to 2021 but down 70% compared to 2019. It's also down 96% compared to the more than one million repossessions that took place in 2010 during the peak of the real estate downturn.
"Unlike foreclosure activity during the Great Recession, the majority of homes in foreclosure are not being repossessed by lenders," said Rick Sharga, executive vice president of market intelligence at ATTOM. "Our recent homeowner equity report shows that 93 percent of borrowers in foreclosure today have positive equity, which they appear to be leveraging in order to avoid a foreclosure by refinancing their mortgage or selling the property at a profit. It seems likely that this is a trend that will continue in 2023.