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Housing Market Summary for the Beginning of October
Hello,
September’s spike in mortgage rates resulted in more buyers postponing their home searches.
We have a higher increase of new listings in September compared to August which is unusual, and this coincides with more price reductions on listings.
I still predict that home prices will be generally flat through the end of the year, however the risk of further price declines has increased. We need to see interest rates stabilize, come down and the Federal Reserve to signal to the markets that they are done increasing rates. Pent-up demand is there; however, affordability and 20-year high mortgage rates have priced many buyers out of the market. Shawn
Here are the basics – the ARMLS numbers for September 1, 2023 compared with September 1, 2022 for all areas & types:
- Active Listings: 13,404 versus 20,084 last year – down 33% – but up 12% from 11,969 last month
- Pending Listings: 4,264 versus 4,862 last year – down 12% – and down 7.4% from 4,604 last month
- Under Contract Listings: 6,499 versus 7,358 last year – down 12% – and down 8.6% from 7,111 last month
- Monthly Sales: 5,563 versus 6,460 last year – down 14% – and down 11% from 6,261 last month
- Monthly Average Sales Price per Sq. Ft.: $285.08 versus $276.60 last year – up 3.1% – and up 1.1% from $281.99 last month
- Monthly Median Sales Price: $432,000 versus $439,000 last year – down 1.6% – and down 0.7% from $435,000 last month
Mortgage rates 7.85% have hit their highest levels in 20 years and the impact on demand can be seen in the numbers. Listings under contract fell another 8.6% from the dismal level of last month. Closed sales were also disappointing, dropping another 11% from last month.
New listings remain scarce, but the flow has increased over the last 2 months. Demand is so poor that the active listing count is starting to build, up 12% over the last month. However, it remains well below last year at this time.
Price readings have something for everyone, with the average $/SF for closed listings up sharply and now over 3% higher than this time last year. However, the median sales price is 1.6% below last year and slightly lower than last month. This strange and unusual behavior is caused by pricing at the high end remaining stronger than it is at the low end.
The balance between supply and demand still favors sellers in the majority of markets, but negotiating power is swinging towards buyers with every day that passes. Supply rising and demand falling means this trend is gathering strength. If interest rates remain in the high sevens or increase further, then we can expect market balance to hit within 2 months or so. However, we usually see a significant weakening of supply from the middle of November to the end of the year and this could temper the downward direction in the Cromford® Market Index.
Demand remains much better in the new home market, though even here buyers will find it increasingly hard to qualify for loans if interest rates get closer to 8%.
A year ago, the market was looking very weak, and few people imagined that $/SF could possibly go up 3% in the following 12 months. This reinforces how unpredictable the market can be when looking more than a couple of months out. The best that can be done with math is a well-defined interpretation of the trend during the next 8 weeks or so. Right now these 8 weeks are not looking rosy. Just remember we felt the same way in October 2022.
Source: AZ Cromford Report
Check out my website which is full of information and a special feature called “Neighborhood News” “the best way to stay connected to what’s happening in the real estate market in your area”. Also, you can search real time listings in any area of the market. Check it out and stay updated with my daily blog and monthly market report that I send out monthly. My Website–Find Your Dream Home
If you’re considering selling or buying, give me a call to discuss your situation and current market conditions.
I love referrals! Please remember me! Thank you, Shawn, your realtor.
