Housing stock grew in December as market remained sluggish
December housing numbers showed inventory opening up as previous booming sales numbers slowed throughout 2022, but supply still lagged behind historical norms.
Active listings in the final month of 2022 came in 54.7% higher on an annual basis, Realtor.com’s December data report showed. But compared to year-end pre-pandemic numbers from 2019, supply was still lower by 33.4%.
The growth in for-sale homes over the last 12 months came more as a result of a sluggish environment with properties staying on the market longer, rather than an influx of new listings. New homes on the market dropped by 21% year over year and came in 17.7% lower than December 2019.
“In December, we saw both buyers and sellers pulling back as they continue to adjust to a challenging market,” said Danielle Hale, chief economist at Realtor.com, in a press release.
Overall trends, though, favor buyers in the coming months, according to the research from Realtor.com.
The median number of days listed homes were on the market before being sold slowed to 67, compared to 56 one year prior. That marks a short-term improvement even if three years earlier, just before COVID-19 hit the U.S., homes were listed 16 days longer.
Among the 50 largest cities covered in Realtor.com’s research, all but one showed yearly inventory gains. Raleigh, North Carolina, led the country with a 226.2% increase, followed by Nashville, Tennessee, at 226% and Austin, Texas, with 186.6%. Hartford, Connecticut was the only market reporting a decline in for-sale properties, down 7.7%.
Across all 50 metropolitan areas, the number of for-sale homes in December expanded by 74.6% annually, with the most growth in the Western U.S. at 110.2%
Buyers haven’t necessarily responded to some of the trends in their favor because housing markets are still feeling some of the effects from the pandemic purchase boom, and they’re also being hit by inflation and interest rates.
Although home price growth softened toward year’s end, substantially higher rates have provided little cost relief for aspiring new homeowners and discouraged them from selling. The median price of properties increased 8.4% to $400,000 between December 2021 to 2022, and was up 33.4% from three years earlier, Realtor.com said.
The spike in rates and home costs also pushed a typical mortgage payment up by nearly $750 each month, or 58.9% more, than 2021, far outpacing the 3.4% rise in rent growth and inflation 7.1% surge.
“Affordability will remain a challenge and buyers will want to keep a close eye on their potential mortgage payment,” Hale said.
Still, trendlines support some movement in the market in the coming months.
Interest rates are expected to gradually decrease over the year and inflation will likely slow.
Home buying sentiment among consumers also improved last month, according to Fannie Mae.
And in the housing market, the share of listings with price cuts grew to 13.6% in December, up from 7.1% and 10.3% in late 2021 and 2019, respectively, according to Realtor.com.
“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.