It is a buyers market, for the most part.  Prices have been sliding for 6 weeks now with slow spring buyer activity and increased inventory, driving more price reductions and longer days on market.  But, with a slight drop of interest rates in May, buyer activity has surged for the last couple weeks.  This has yet to translate to more contracts and only time will tell if this translates to a brief summer sellers market.

I don’t think it will.

Price and Price Per Square Foot

After remaining above one or both of the last two years so far year to date, the average sold price dropped below 2022 and 2023 last week, ending at $696,498.

While buyer activity as represented by the number of showings per week has surged in the last 30 days, it has not yet translated to a spike in contracts.  As such, inventory continues to climb at a rate that outpaces additional buyer activity which is leading to more supply, which will lead to prices continuing to decline through year end.

This is also reflected in the average sold price per square foot.  Last week ended with the average sold price per square foot at $334, compared to $342 a year ago and $355 in 2022.

Inventory

We have 60% more homes available for sale than the same time last year, ending last week with 8,560 homes on the market compared to 5,354 in 2023.  For comparison, the same week of 2022 (when the market had already shifted but people were just figuring it out) had 4,962 homes on the market and interest rates were at 4.875%.

Inventory typically peaks in August/September or October of each year.  Based on current trend of inventory growth, I would anticipate inventory to cross 10,000 homes on the market by the end of August this year.  The wild card will be the presidential election and whether this crazy political season causes more people to wait it out.

Either way, anticipate longer days on market and slower showings per listing leading to price reductions through year end, unless interest rates drop.

Showings

It’s hard to hear because your sellers aren’t seeing a substantial benefit, but total showings have surged, outpacing 2022 and 2023 by a wide margin.  Last week hit almost 26,000 home showings compared to just 21,000 and 19,000 for 2022 and 2023 respectively.

Again, this surge is likely related to the modest May drop of interest rates.  The market is telling us that conventional 30 year fixed interest rates in the mid-6% range and government loans in the high-5% range is the tipping point of buyer activity.

Use this fact and pose the question to your database.  Are you interested in buying/moving if rates drop further?  

This increase in buyer activity has only modestly impacted showings per listing due to the significant rise of inventory over the same period of time.  Showings per listing ended at 3 per home per week last week.  Not exactly a barrage of activity for your seller.

And to reinforce that sellers are not seeing the impact of this spike of showings, showings per contract has reached a 7 year high.  For the last 3 weeks it has taken over 20 showings for a property to get under contract.

If your seller is frustrated, just remind them that if you’ve only had 5 showings so far, on average you need about 15 more before you’ll receive an offer.  This type of objective measurement is super helpful in emotional circumstances.

Offers Below Asking, Price Reductions, Days on Marker and Concessions

If we were questioning whether the market had shifted…it’s answered in the chart below. The percentage of properties closing over asking price peaked in May at 32% and month to date for June we are down to 29.7%. This leaves 49.4% of properties selling for below the asking price and a modest rise of properties selling at the asking price, ending last week at 20.9%.

We will likely see variation in this chart over the coming month on a week by week basis with occasional spikes in offers over asking given the recent surge in buyer activity, but overall expect offers over asking to decline through year end.

Similar with price reductions.  The speculation from a month ago that the summer slowdown had likely begun a month earlier than normal is also displayed in the percentage of properties reducing price. 

April was our lowest percentage of price reductions this year at 25.5% and as of this week we are averaging 32.4% of properties reducing price.   Last year the low was 22.5% in May and June was 25%.

Unless buyer activity really spikes, anticipate a jump in price reductions over the coming months.  So your sellers don’t feel alone and don’t blame you, let them know that already 1/3rd of properties are reducing their price and that number will climb.

Days on market is definitely on the rise, as we have anticipated for about a month given the slow buyer activity and rise of inventory.  Average days on market for all property types last week hit 29.08 compared to 20.18 same time last year and 10.93 in 2022.

In analyzing days on market by price we see there is not a substantial difference in the average days on market.

$0-$650,000

 

$650,000-$1.7MM

 

$1.7MM and Over

In fact, at this price point there is much greater stability than there has been in the past 4 years.

And finally, concessions have remained elevated higher than anticipated this year with rates remaining inflated.  The average contract included seller concessions of $5,348 last week.  If rates remain up and inventory continues to climb, this number will likely rise through year end.