Buyers are gaining ground in markets across the U.S.
Knock’s Buyer-Seller Market Index finds that more metros are becoming buyers markets, and the trend is expected to continue.
Key points:
- The index found that the housing market entered neutral territory in October after years of being a strong sellers market.
- While the hottest metro areas still favor sellers, buyers have gained leverage in nearly all markets analyzed.
- The report expects many of the largest metros will become buyers markets by summer.
The slowdown in the housing market is creating more of a balanced market between buyers and sellers, according to a new report.
In its Buyer-Seller Market Index released on Nov. 30, Knock, a home finance technology company, concluded that the U.S. housing market as a whole entered neutral territory in October, the first time since July 2020 that neither buyers nor sellers had a firm upper hand.
The report projects the market will continue moving toward a buyers market in the next 12 months, but it will be a gradual shift. Of the 100 largest metro areas studied, 51 were still sellers markets in October, 39 were neutral and 10 favored buyers.
Sellers still have an edge in most large metros
"Despite moving into neutral territory, sellers still hold the advantage in a majority of the nation's largest metros, and many will continue to favor sellers well into 2023," said Knock Co-Founder and CEO Sean Black. "With interest rates stabilizing in recent weeks and less competition, buyers may begin to re-enter the market over the next few months, which could result in a return to a more normal spring homebuying market."
According to the index, six of the the top 10 sellers markets were in the South, with Fayetteville, North Carolina; Winston Salem, North Carolina; and Columbia, South Carolina topping the list — all markets with sale prices well below the national median. A lack of inventory typically lands metros on this list; the low amount of homes available will keep many of these markets in the sellers category well into 2023, according to the report.
Other metro areas on the list of sellers markets include Hartford, Connecticut; Rochester, New York; and Seattle.
Boom towns now favoring buyers
In the buyers market category are areas that have seen increases in inventory and more days on the market. Topping the list was Phoenix, where the median amount of time a home sat on the market was 34 days. Phoenix, a pandemic "boomtown," is among the cities where home price growth is cooling the fastest, according to a recent Redfin report. Other metro areas on the list of buyers markets include San Francisco, Salt Lake City and two other fast-cooling boomtowns, Austin and Boise.
The index is forecasting that many of the largest markets will be firmly in buyers market territory by the summer of 2023. By October, Knock predicts 26 will be a buyers market, 38 will remain a sellers market and 36 will be neutral.
Knock forecasts an 8.5% decline in home sales and a 16% increase in inventory over the next 12 months. It also expects median prices to peak nationally in June 2023 at $416,000, falling to $410,000 in October, which would still be a 5.6% increase compared to October 2022.
Inventory is expected to rise from 1.9 months in October 2022 to 3.4 months in October 2023, according to the report. A balanced market is considered to have an inventory of 4-6 months, so the U.S. market could approach that level for the first time since April 2019, when supply peaked at 3.7 months.
The index is based on data from more than 150 million properties in the nation's 100 largest and most active metropolitan areas.