September 2023 Housing Market Update
Here's my monthly market update - sorry I'm a bit late posting this one as we're already nearly half-way through September!
Supply – record lows, contradicting seasonal norms
- There were 15% fewer homes listed this August compared to last, the fewest in any August on record.
- The number of homes for sale remained roughly flat from July, down 33% compared to last August and still hovering around record lows. There are fewer homes for sale than there were in January, when normally there are 20-40% more homes for sale in August vs. January.
Demand – still soft, but moderating
- Pending contracts are down 7.6% from last August, still consistently down year-over-year but beginning to flatten out at 2013 levels.
- August closings were down 14% compared to last year, less of a year-over-year drop than last month which may indicate the early stage of a flattening in this metric too.
Supply/Demand Relationship – stable, seller’s market
- Seasonally adjusted housing supply still stands at 1.8 months, virtually unchanged since November 2021. The longest supply I could find in any individual MLS area was 5.2 months, meaning all areas are in a seller's market.
- Seasonally adjusted median days to contract remain at 10, steady since July 2021.
Prices – flat, possibly trending back upward
- August median sale price was up 7.6% compared to august 2022, the third consecutive month-over-month increase after 6+ months of slight decreases, and the largest increase in this trend.
- Seasonally adjusted prices are still flat, as they have been since August 2022, but with three consecutive month-over-month increases we may see the longer-term trend turn back up.
Mortgage rates – higher
- Today's (9/6/23) 30yr fixed averages 7.21% after briefly spiking to 7.49% in late August. Aside from that spike, rates have been somewhat stable in the low-7s for the past 90 days. FHA/VA loans are nearly a half-point lower, around 6.8%. There 5/1 ARM averages 7.0%, with the 15yr fixed around 6.6%.
- Multiple Federal Reserve members have indicated they plan to hold the Federal Funds target rate at its current level (5.25-5.5%) at their meeting September 19-20. Inflation is reading 4.2% and wage growth is moderating, so the Fed is expected to “hold” for now but will institute another increase in November if any of those trends reverse.
What to do?
- Sellers: The advantage is still yours, but pricing is flat. Price, prep and stage aggressively as you do need to compete on price.
- Buyers: I’ve been repeating myself for 2 years about the unlikelihood of housing affordability improving in the near-term. Now, despite mortgage rates persisting above 7%, prices are actually showing signs of increasing. The fundamental drivers of supply and demand still indicate that buying sooner will almost certainly be more affordably than waiting.