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November SFR Sector Briefing
December 13, 2022
In this month's look back at the November supply and demand signals affecting single-family real estate, we see active listings declining by a steeper rate than this time last year, an increasing proportion of new builds on the market, and average list prices stabilizing or declining slightly. The September S&P Case-Schiller National Home Price Index, published on November 29, confirmed the beginning of modest nationwide sale price declines, and the pace of annual price growth has now slowed for the 6th consecutive month.
Where do home prices go from here? Redfin predicts they will fall roughly 2% from the prior year in Q1. Longer-term speculation hinges on inflation's persistence, mortgage interest rate movement, and the volume of new listings. Suffice it to say, we'll have our eyes on the Fed's next pronouncements later this week.
NOTES ON THE DATA SET
Aggregate market data comes from 10 of our operating markets: Nashville, Charlotte, Atlanta, Birmingham, Huntsville, Tampa, Jacksonville, Orlando, Kansas City, and Greensboro. Inventory and price data include single-family residences, townhomes, and duplexes with 2+ bathrooms and 3+ bedrooms priced between $100-$500K.
Active listings see outsized declines
Inventory climbed from March '22 through August '22, plateaued in September, and now continues its Fall decline, albeit more steeply than the typical seasonal trajectory.
Spotlight markets: Atlanta (ATL), Nashville (BNA), Charlotte (CLT), Kansas City (MCI)
As the aggregate market trend shows, the inventory drop is steeper this year than the same period last year. In our four spotlight markets, there were 37,574 active listings in November 2021, but this year that total has declined to 34,347.
New build listings increase relative to total inventory
Despite a decrease in active listings in recent months, the percentage of new builds staying on the market is rising as buyers wait for price corrections. All markets in our spotlight group, except Charlotte, have shown an increase in the percentage of active new build listings, with most markets displaying steady increases over the last six months.
List prices are shifting lower, but slowly
Median list price is still higher year-over-year in our spotlight markets, but the last six months have shown stagnant growth and moderate declines.
New builds in particular have experienced significant decreases in median list price within the last six months.
The aggregate trend clearly demonstrates the current trajectory of pricing in the market. The median price point in November of this year ($360k) is higher than last year ($345k), but a correction -- so far relatively gentle -- is still underway.
The 30-year mortgage interest rate ticks lower
And so do active listings. If mortgage interest rates stabilize or decrease slightly in the advent of easing inflation, and if inventory continues to decline, prices are unlikely to make big downward shifts. But those ifs are iffy. If inflation persists and mortgage interest rates remain elevated, even historically low inventory won't buoy prices forever.
Market data brought to you by the Picket IQ team
Our team is here with the data you need to make your own assessment of this shifting landscape. For more in-market observations or a complimentary strategy consultation, please reach out to James Newgent at email@example.com.