Every home buyer and home seller has individual circumstances, so I'm careful not to over-emphasize housing market stats, but a few times a year it's helpful to offer up some data that I find helpful in understanding the market. The headlines in the national media blurt all kinds of indicators, which can seem confusing, so here two that I find useful, and I hope you do too.
For example, you probably have seen headlines that claim that "home sales are down." But what does that mean - is the price of my current home down? If I'm trying to buy a home, does that mean that it's harder, or easier to do so?
Here are the two charts from AEI that help explain the current market. First up is the total number of homes for sale across the country:
Notice that the black line shows that the number of homes for sale across the country is at historically low levels. October's 1.1M homes for sale across the country is well short of the typical 1.5M to 1.6M. There are lots of theories about why this number is so low, including:
Homeowners locked into low interest rates and therefore unwilling to move up to a bigger home since that will likely involve a higher interest rate mortgage
Post pandemic nesting in place and work from home
No matter the reason, the impact on home buyers and sellers is clear - fewer homes for sale results in tighter supply, which tends to keep prices rising. So when the media reports "home sales are down", they mean that the number of homes sold is down, not necessarily the prices.
Of course, home prices are influenced both by the number of homes available for sale, the supply, and the number of buyers out there looking, the demand. That's why the second chart is also helpful.
This chart brings the buyers into the mix. It shows the number of months it will take for all of the houses for sale to be bought up by the buyers who are out there.
Five to seven months is considered a good balance between buyers and sellers. When there are fewer than five months, sellers know they can sell relatively easily and are therefore less flexible on price and terms for sale. When there are more than seven months available, buyers are empowered to seek more favorable terms.
So what we are currently seeing is more inventory, meaning that the market is becoming a little more balanced between buyers and sellers, especially at higher price points (the blue line). This is good news for home buyers. But it's still a good time for sellers - homes priced right and in good shape can definitely find an eager buyer quickly.
Also note that these are national statistics. The Boston metro currently averages 2.1 months of inventory, the lowest across the top 60 metro areas in the country.
These are the current market stats, courtesy of the AEI Housing Institute. If you're curious to learn more or just talk about what all this may mean for you and your home buying/selling/owning journey, give me a call!