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Nov 13, 2022

A For Sale sign is posted in front of a property in Monterey Park, California on August 16, 2022.

Frederic J. Brown

After two years of a historically poor housing market, listings are beginning to rise quickly.

According to Realtor.com in October, the national active inventory jumped 33.5% compared to last year. This means that supply is at its highest point in two years.

The sellers aren't rushing into the market, as newly listed homes are down 16% and pending listing are down 30%. There is more supply than demand, as the homes on the market haven't sold as quickly as they did six-months ago.

It takes on average 51 days to sell one home, up six days from a year earlier.

"As the rapid rate rise reshapes the housing market dynamics in this fall, both sellers and buyers are taking a step back, to recalibrate plans," said Danielle Hale of Realtor.com.

Mortgage rates have climbed so high and so fast that home shoppers are rushing to the sidelines. Already affordability is difficult, with home prices increasing more than 40% in the wake of the Covid-19 epidemic. But with rates now more than twice what they were in January, at just over 7%, potential buyers are looking at a monthly payment that is nearly $1,000 higher than it would have been at the start of the year.

The availability of housing depends on how much you are willing to pay and what your city is looking for.

In Phoenix, inventory rose by an astonishing 174% in Oct. Over the past two decades, Phoenix saw a flurry of buyers as workers who were able to work anywhere in the world moved out of California's expensive markets. Redfin says that the city has seen a drop in sales of more than 30% since last year.

Inventory is also up 167% in Raleigh, North Carolina, and up 145% in Nashville, Tennessee, markets that also saw an influx of buyers during the pandemic. Stock levels are still low in Chicago (Milwaukee) and Hartford (Const.), but these markets didn't see the same surges in demand over two years.

The slowdown in demand for homes has caused sellers to cut their prices. There have been a total of 20% price reductions on Realtor.com listings, almost double that of a year back.

Even so, home prices may not be falling as quickly as they were a year ago. According to multiple surveys, the price gains made a year ago are shrinking at an unprecedented rate.

With high prices, more buyers seem to be expanding their search. Just over 60% of listings views on Realtor.com in the third quarter of this year came from shoppers outside of a listing's area. This is an increase of 57% and 52% respectively in the second quarters and the same quarter in 2021.

Buyers who have the flexibility to relocate to lower-priced markets could offset higher mortgage payments. The good news for sellers in these regions is that even if the home is not very expensive, they could still get strong interest from those out-of–towners." Hale concluded.

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