The housing market decelerated significantly throughout 2022, creating more opportunities for homebuyers, in stark reversal of the frenzied seller's market of the previous year. According to a new report from RE/MAX [1], the year's most telling stats were accentuated in December, where home sales were down 38% from a year ago, while the number of homes for sale was up 69% in the report's 53 metro areas.
Sales in every month of 2022 fell short of the previous year, with the percentage of decline starting out in single digits during Q1 before topping 30% in Q4. The median sales price of $385,000 was 1.3% higher year over year in December, compared to 13.9% higher year-over-year last January.
"The past three years have each had a unique context – and 2022's included quickly rising interest rates and the difficult year-over-year comparisons to the extremes of 2021. Ultimately, though, it was a fairly good year for home sales by historical standards," said Nick Bailey, RE/MAX President and CEO. "Looking forward into 2023, the higher-interest rate environment clearly poses some challenges – but as buyers, sellers and agents recalibrate their expectations, sales will continue to occur. Demand hasn't gone away. The question is which real estate professionals have the skills, experience, resources and adaptability to provide the guidance consumers will continue to need."
Key Findings:
- New listings recorded 2022's largest month-to-month decline of 25.2% and finished 15.1% lower than a year ago.
- Homes sold in December were on the market for an average of 47 days. That was 10 more days than one year ago.
- December's 2.5 months supply of inventory was unchanged from November but more than double the 1.2 of one year ago.
"As strong believers in the advantages of homeownership, we think the ongoing market rebalance is actually a good thing," said Bailey. "It's putting buyers and sellers on more equal footing, which is refreshing after so many years of sellers having the upper hand. Sellers still have a strong position, but buyers are gaining more power in what's likely one of the largest financial transactions of their lives. With mortgage rates and home prices appearing to stabilize, and with the dramatic increase we've seen in the number of homes for sale, both buyers and sellers have reason to be optimistic as we head into the new year."
Mark Wolfe, Broker/Owner of RE/MAX DFW Associates in Coppell, Texas expects the market to continue to improve over time.
"We saw the beginning of some stabilization at the end of 2022, and I am hopeful we are reaching a normal market," said Wolfe.
As in October and November, the average Close-to-List Price Ratio in December was 98%, meaning that homes sold, on average, for 2% less than the asking price. The ratio peaked at 103% in April and May compared to 100% in December 2021.
December inventory was down 12.2% from November but grew month-to-month in six of the last nine months.
Highlights and local market metrics for December include:
New Listings
Of the 53 metro areas surveyed in December 2022, the number of newly listed homes is down 25.2% compared to November 2022, and down 15.1% compared to December 2021. The markets with the biggest decrease in year-over-year new listings percentage were Des Moines, Iowa at -43.6%, Phoenix at -39.7%, and Los Angeles at -38.6%. Leading the year-over-year new listings percentage increase were Trenton, New Jersey at +44.2%, Philadelphia at +39.9%, and Dover, Delaware at +38.3%.
Closed Transactions
Of the 53 metro areas surveyed in December 2022, the overall number of home sales is down 1.4% compared to November 2022, and down 38.2% compared to December 2021. The markets with the biggest decrease in year-over-year sales percentage were Las Vegas at -52.3%, Anchorage, Alaska at -49.5%, and Dover, Delware at -48.9%. No metro area had a year-over-year sales percentage increase in December.
Median Sales Price – Median of 53 metro area prices
In December 2022, the median of all 53 metro area sales prices was $385,000, down 2.3% compared to November 2022, and up 1.3% from December 2021. The markets with the biggest year-over-year decrease in median sales price were San Francisco at -5.1%, Los Angeles at -4.7%, and Honolulu at -4.3%. Four metro areas increased year-over-year by double-digit percentages, Manchester, New Hampshire at +17.7%, Fayetteville, Arkansas at +12.3%, Indianapolis at +11.8%, and Omaha, Nebraska at +10.2%.
Close-to-List Price Ratio – Average of 53 metro area prices
In December 2022, the average close-to-list price ratio of all 53 metro areas in the report was 98%, flat compared to November 2022, and down from 100% compared to December 2021. The close-to-list price ratio is calculated by the average value of the sales price divided by the list price for each transaction. When the number is above 100%, the home closed for more than the list price. If it's less than 100%, the home sold for less than the list price. The metro areas with the lowest close-to-list price ratio were New Orleans at 94%, Miami, Florida at 95%, and Coeur d'Alene at 96%. The highest close-to-list price ratios were Burlington, Vermont at 103%, and Hartford, Connecticut at 101%.
Days on Market – Average of 53 metro areas
The average days on market for homes sold in December 2022 was 47, up eight days from the average in November 2022, and up 10 days from the average in December 2021. The metro areas with the lowest days on market were Baltimore at 19, Philadelphia at 21, followed by a three-way tie between Dover, Delaware, Trenton, New Jersey, and Washington, DC at 22. The highest days on market averages were in Fayetteville, Arkansas at 77, Bozeman, Montana at 75, and Seattle, Washington at 72. Days on market is the number of days between when a home is first listed in an MLS and a sales contract is signed.
Months' Supply of Inventory – Average of 53 metro areas
The number of homes for sale in December 2022 was down 12.2% from November 2022 and up 69.0% from December 2021. Based on the rate of home sales in December 2022, the months' supply of inventory was flat at 2.5 compared to November 2022, and increased compared to 1.2 in December 2021. In December 2022, the markets with the lowest months' supply of inventory were a tie between Albuquerque, New Mexico, and Trenton, New Jersey at 1.0, followed by a five-way tie between Baltimore, Hartford, Connecticut, Manchester, New Hampshire, Seattle, and Washington, DC at 1.2.
To read the full report, including more data, charts and methodology, click here [1].