Is any news good news? When there are more houses to choose from, perhaps it is

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Published Date 12/4/2023

If you’re desperate to buy a home, Realtor.com’s Jillian Pretzel says homebuyers who brave the cold to get out there and shop for homes right now face a strange mix of really good as well as not-so-great news.

“First, the good: More homes are finally coming on the market,” she says. “The bad? The cost to finance that purchase has hit a new high. A new report by Realtor.com® has found that 7.5% more home sellers listed their homes in November than this same month last year.

Realtor.com Chief Economist Danielle Hale reports, “November saw the first annual growth in newly listed homes in 17 months.” She also says that if you look at total inventory—of both new listings and old—that’s improved, too, with the typical day in November enjoying 0.7% more homes for sale than a year earlier.

Why is this such a big deal? According to Hale, it “ends a four-month streak of annual inventory declines.” says Hale. To boot, seasonal housing stock in November increased by 2.4% above October levels, which is another first. “It’s actually “the first time inventory has increased this late in the fall season since our records commenced in 2016,” Hale points out.

Pricing and interest rates are a whole other ball game, however. “While this fresh infusion of real estate listings is a welcome gift for buyers, they will have to pay dearly for them,” says Pretzel. “In November, homes were priced at a median of $420,000. That’s down from October’s $425,000, and up by just 1% compared with November of last year.”

Although Hale maintains that the nation’s median list price has remained “relatively stable,” November’s higher mortgage rates compared with last year have increased the monthly cost of a typical home by 7.9%—roughly $172 more per month compared with a year earlier, which Hale says is a new record since Realtor.com began tracking this data in mid-2016.

Bottom line? It means the typical homebuyer or combined homebuyer income today would need to hit around $118,000 per year to comfortably afford those house payments, up $7,100 from just a year ago.

Another tidbit of news: many sellers who waited on the sidelines with a wait-and-see approach seem to have turned a corner. Giving up hope that rates will subside anytime soon, they’re out there looking again.

“Many consumers still expect mortgage rates to rise over the next year,” Hale says. Some home sellers might be looking to close the deal before rates go up further. She also cites Fannie Mae’s Home Purchase Sentiment Index, which found a 17% increase in respondents who believed it was a good time to sell in October compared with reports from last year.

Sellers, however, as responding to this interest rate predicament buyers with price reductions, slashing prices with “more momentum than is typical this time of year,” according to Hale.

Despite this rise in new listings, historically speaking, the pickings are still slim compared with the pre-pandemic days. Total housing inventory is still 37.8% below typical 2017 to 2019 levels.

Realtor, TBWS

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