Existing Home Sales Increased for Second Consecutive Month

For the first time in a long time, the number of newly listed homes is beginning to rise. Realtor.com reveals the number of existing homes entering the market has increased for two months in a row (this comes after six months of declines). Here’s a graph showing the monthly new listings going back to January of last year. 

However, buying demand is still outpacing housing supply.

Though the increase in homes coming to the market is great news for prospective homebuyers, the number of buyers is still outpacing the number of homes available for sale.

“During the final two weeks of the month, more new sellers entered the market than during the same time last year. . . . However, with 5.8 million new homes missing from the market and millions of millennials at first-time buying ages, housing supply faces a long road to catching up with demand.” (Realtor.com)

In fact, buyer demand was greater this January than any other January in the last five years (see graph below):

This prompted ShowingTime to say:

“The latest data from ShowingTime . . . shows a surge in home buyer demand in January. . . . This enormous activity occurred in a month when buyer activity typically slows and followed a historic 2021, where buyer demand across the country was extraordinarily strong.”

What does that mean for you?

Basically, as homes come to the market, they are quickly being purchased by eagerly awaiting buyers. So even though the number of newly listed homes is increasing, the number of active listings is still shrinking every month because buyers are purchasing homes almost as soon as they come up for sale. That means listings are coming on and off the market so fast that they don’t carry over to be counted in the active listing numbers the following month. Here’s a graph showing the number of active listings each month since last January:

This graph shows that the number of active listings has decreased for each of the last five months even though the number of newly listed homes has increased over the last two months.

Conclusion:

After yesterday's Fed rate hike, the average rate for a 30 year fixed loan is approximately 4.3%. I believe we will continue to see an increase in new listings as FOMO (fear of missing out) kicks in for sellers wishing to get top dollar. I also believe sellers receiving offers above appraised value will slowly diminish, and buyers who were previously priced out will have more opportunities.

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