Understanding what’s going on in the real estate market is more crucial now than ever before. Whether you’re a seller looking to list your property, an investor seeking the next opportunity, or a prospective buyer, having a grasp of market trends is a prudent move.
In this blog, we will dissect the three core metrics that guide real estate conversations – the number of homes sold, median sales price, and median days on market. These data and insights serve as barometers for the overall vigor and health of the housing market and they are the indications that we’ll scrutinize closely in this Q2 update of 2023.
Number of Homes Sold
In the second quarter of this year, 1,053,000 homes were sold. That is an increase of 36.4% compared to the number of homes sold in Q1. The increase is likely seasonal so it isn’t clear evidence of a great market.
It’s also vital to look at the bigger picture beyond the quarter-to-quarter change. There was a 29.19% decline compared to the same quarter of last year. This tells us while there may be seasonal fluctuations, the market continues to experience an overall trend of fewer homes sold.
Several factors influence the number of homes sold. One factor is the limited supply which means there are fewer homes available for sale. This, in turn, results in fewer homes sold. Higher interest rates are another huge facet of the decline as they make it more difficult for buyers to afford homes.
Median Sales Price
The median sales price for Q2 2023 stands at $416,100. Comparing it to the same quarter of 2022, we see a decrease of 7.39%. On top of that, when we look at the quarter-over-quarter change, we find the median sales price has declined by 3.01% compared to Q1.
The median estimated per-square-foot value for the states within the nation over the last month, based on ATTOM’s report, ranges from $94.74/sqft (Mississippi) to $468.87/sqft (Hawaii). The median sales price has soared during the past years, reflecting an increase of 40.64% from 2018 to 2022.
Many may have heard talk that prices would drop this year but the low supply of homes for sale has prevented that from happening. The nation’s population has been growing steadily over the years, which has increased the demand for housing. This demand has put upward pressure on home prices, making it difficult for prices to drop significantly.
The median sales price has been steadily increasing, and the recent decrease is likely one of the very few fluctuations in the quarterly trends. Overall, the housing market is expected to remain competitive and home prices are expected to rise, though not at an astronomical rate.
Median Days on Market
The median days on market for the second quarter was 44. When we look back at the same quarter of last year, we see an increase of 47% in the median days on market.
This trend might imply a slightly slower pace of sales or a shift in buyer preferences. It could also indicate that there is a surplus of homes on the market, which could lead to a decrease in home prices.
But, it’s noteworthy that there’s a 30% increase from the previous quarter. This uptick is likely a seasonal fluctuation. Numerous factors affect the pace of sales, including:
- Inventory: Since the inventory is limited, properties tend to sell faster as buyers compete for a smaller pool of options.
- Seasonal Variations: The increase in the median days on market from Q1 2023 is likely a seasonal trend.
- Economic Conditions: High mortgage rates and high inflation can stifle the housing market.
- Interest rates: Mortgage rates remain a tough challenge for the housing market this year, and this has kept both first-time and repeat buyers on the sidelines.
The significance of longer or shorter days on market depends on your perspective. A longer duration for sellers suggests that they might need to adjust their price or marketing strategy. On the other hand, buyers have less competition and more negotiating power.
The Impact of External Factors
The real estate market is not an isolated entity as it operates within the larger context of governmental and economic policies. Mortgage rates are one of the biggest external factors that can influence the city’s housing market. Several elements, including inflation, monetary policy, and the state of the general economy determine rates.
As of October 12, 2023, the average 30-year FRM was 7.57%. Rates are likely to remain at these levels well into 2024. Inflation still poses a challenge for buyers, sellers, and the housing market. The higher rate affects demand and affordability.
Moreover, it may also discourage potential buyers from entering the real estate market which consequently leads to a slowdown in demand and impacts the prices of homes.
Expert Opinions and Predictions
While the housing market is expected to be competitive in Q3 2023, the market’s trajectory remains uncertain, influenced by factors such as inventory and mortgage rates. However, experts predict that the market will continue to be challenged by the lack of inventory and relatively steady demand, practically ensuring that Q3 will remain a sellers’ market. By focusing on the market’s positive aspects, sellers and buyers can still find success in the area’s real estate market.
Seasonally, based on history, the housing market often experiences a slowdown in the fourth quarter. The number of real estate transactions in the final three months of the year will be further reduced as a result of the low inventory of homes available for sale and because most of us often focus more on the holidays and festivities. Besides the current economic situation, the market is predicted to remain subdued because of the ongoing economic uncertainties and higher interest rates.
Conclusion
The housing market presents a dynamic and complex picture. The interplay of opportunities and challenges in addition to the market’s adaptability and resilience makes it worth watching. As we look ahead, the promise of possibilities and growth looms, offering a beacon of hope for investors, sellers, and buyers alike.
If you have any questions or inquiries, or if you’re considering making a real estate move, I’m here to assist you. Your dreams and goals are my priority and I’m here to help you successfully navigate the vibrant real estate market. Feel free to reach out – I’m just an email or phone call away!
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