Rate Hikes Continue to Slow Housing Market Activity and Create Market Uncertainties
Interest Rates Surge to 22-Year Highs, Fueling Housing Market Uncertainties
Shift Towards Rental Market Intensifies as Purchasing Activity Declines, Represented by a 27.5% Year-Over-Year Decline in New Listing Volume
Closed Prices Continue to Rise as Listed Prices Reached Their Peak in June
HouseCanary, Inc. (“HouseCanary”), a national brokerage known for its real estate valuation accuracy, released its August Market Pulse report, which finds that list prices peaked in June while closed prices continued to achieve positive year-over-year growth, despite market activity remaining low from a historical perspective.
Interest rates are now at the highest level seen in 22 years due to the Federal Reserve’s efforts to combat the 3.3% year-over-year inflation growth observed in July. Federal Reserve officials and experts are now predicting rates to hike yet again in September, creating more uncertainty in the housing market and overall economy.
Homeowners and potential buyers continue to distance themselves from the purchase market and redirect their interest toward the rental market, as can be seen by the continuous year-over-year declines in purchasing market activity and rapidly increasing inventory of single-family rentals.
In addition, the low market activity has caused net new listing volume to continue lagging behind contract volume, contributing to depressed inventory. Looking ahead to Q3 and beyond, market activity and inventory are expected to remain low as more rate hikes from the Federal Reserve are likely to be introduced in the upcoming FOMC meetings.
Jeremy Sicklick, Co-Founder and Chief Executive Officer of HouseCanary, commented:
“In August, the housing market continued to show low net new listings and slow price increases, and with the latest round of rate hikes, these market conditions are only expected to linger. Single-family rentals remain the most desired choice for potential homebuyers in the current uncertain market environment, as price and inventory increase on a year-over-year basis persist. Notably, single-family rental inventory is up 41.4% when compared to August 2022, while inventory in the purchasing market is down 12.5%. As we move into September, we can expect an additional rate hike to be set in the upcoming meeting, continuing the trend of low market activity we have been experiencing over the past year.”
Key Takeaways:
- For the month of August 2023, 216,619 net new listings were placed on the market, and 256,777 properties went under contract. This represents a decrease of 29.5% and 17.1%, respectively, versus August 2022.
- The decrease in net new listings was driven by a 27.5% decrease in new listing volume as well as an 18.9% decrease in removals compared to August 2022.
- Median days on market stood at 37, matching the total from August 2022.
- The sale-to-list-price ratio stands at 99.3%, which is well above the lowest value observed in January 2023.
- Price cuts are down 33.9% year-over-year and are down nearly 35.6% from their recent peaks occurring in September and October 2022.
- Total inventory is down 12.5% from the same period in 2022, and down 10.7% from 2021. Inventory remains very low from a historical perspective.
- Total single-family rental inventory is up 41.4% from the same period in 2022, and up 161.1% from 2021.
Learn more at www.housecanary.com.
