The housing market has been through its share of ups and downs, but one thing remains clear: 2023 is still a seller's market. In this article, we'll explore the reasons behind this, the advantages it offers to sellers, and the current state of housing inventory.
The State of Housing Inventory
The latest Existing Home Sales Report from the National Association of Realtors (NAR) reveals that the supply of homes for sale is incredibly low. Housing inventory is typically measured in two ways: the number of available homes on the market and months' supply, indicating how long it would take to sell all available homes based on current demand.
In a balanced market, there's typically a six-month supply of homes. However, today's reality is quite different. Currently, we have only about 3 months' supply of homes at the current sales pace.
Clearly, the current housing inventory situation still indicates a seller's market. We are far from what's considered a balanced market, with the current months' supply being half of what's typical in a normal market. This shortage of homes aligns with today's strong buyer demand, as Lawrence Yun, Chief Economist for NAR, points out:
“There are simply not enough homes for sale. The market can easily absorb a doubling of inventory.”
Examining Months Supply for Existing Single Family Homes
One crucial metric that provides insight into the current state of the housing market is the months' supply of homes. This figure represents the number of months it would take to sell all available homes on the market based on the current level of demand. In this section, we'll delve into the months' supply data for existing single-family homes in August 2023.
Before we dive into the current numbers, it's valuable to review the historical trend to understand the context. Here's a look at the months' supply figures for the past year:
This data reveals a consistent pattern of low months' supply, indicating a prolonged seller's market. In August 2023, the months' supply for existing single-family homes stands at 3.0. It's important to note that this figure is seasonally adjusted to account for fluctuations in supply and demand throughout the year.
This seasonally adjusted supply, when compared to seasonally adjusted sales, paints a clear picture of the market dynamics. The fact that the supply remains below the three-month mark signifies the ongoing shortage of available homes relative to buyer demand.
These numbers reaffirm that 2023 continues to be a seller's market, with limited inventory contributing to favorable conditions for those looking to sell their homes. Sellers can expect their properties to remain in high demand, making it an opportune time to list their homes and potentially secure competitive offers.
Advantages of Being in a Seller’s Market
So, what does this seller's market mean for you as a seller? It's a golden opportunity. At this moment, there are buyers who are ready, willing, and able to purchase a home. With a scarcity of homes on the market, any property that gets listed becomes a magnet for these eager buyers.
If you collaborate with a local real estate agent to list your house now, and ensure it's in good condition and priced right, you could attract a lot of attention and potentially receive multiple offers. The market is in your favor, and it's a chance to maximize your returns.
The Current Market Trends
Looking at recent data, the trends continue to support the notion of a seller's market. National Association of Realtors® reported that the inventory of unsold existing homes increased slightly by 3.7% from the previous month to 1.11 million at the end of July, equivalent to 3.3 months' supply at the current monthly sales pace. This indicates a persistently low inventory of homes.
New listings, a measure of homes being put up for sale, have been declining for 60 weeks, with this week showing a 3.1 percentage point widening compared to the previous week. Despite some potential inventory gains this fall, fresh listings remain more than 20% below pre-pandemic levels for this time of year.
Active inventory has also declined, trailing behind the previous year by 5.9%, marking the 10th consecutive decline. While pending home sales have increased, existing home sales are expected to remain relatively stifled in 2023, with a projected 5% dip in for-sale inventory compared to 2022.
In conclusion, 2023 continues to be a seller's market due to the low supply of homes for sale. This presents an excellent opportunity for sellers to capitalize on the strong demand from eager buyers. If you're considering selling your home, now is a favorable time to connect with a local real estate agent and make the most of this advantageous market situation.