New markets require new approaches and tactics. Experts and industry leaders take the stage at Inman Connect New York in January to help navigate the market shift — and prepare for the next one. Meet the moment and join us. Register here
Along with cooler temps, December ushered in a ‘more normal’ market as home price and mortgage rate growth tapered off — a welcome turn of events for homebuyers who’ve been waiting for their opportunity to move off the sidelines.
Jeff Tucker
“The housing market ended 2022 in a deep freeze, but there are some green shoots pushing up,” Zillow Senior Economist Jeff Tucker said of the company’s latest housing report on Thursday. “The recent thaw in mortgage rates has begun to attract some renewed interest from buyers, and home sales are climbing again compared to last year.”
“If rates continue to march down this spring and sellers return in seasonal force, the housing market just might get to have a normal — maybe even boring — year,” he added.
In the last months of the year, the reality of a coming buyers’ market became clear as more than half of homesellers (52.9 percent) sold their homes below the list price. Meanwhile, the share of homes selling above asking price dropped to the lowest level since 2020 (27.9 percent) — meaning roughly a fourth of sellers got their exact asking price.
Buyers’ increasing leverage is also reflected in December’s average days on market, which rose 130 percent year over year from 13 days in 2021 to 30 days in 2020. It’s still faster than the pre-pandemic average of 43 days, Zillow said, but still signals a significant shift in the market.
The slower sales pace has given rise to more robust inventory levels, with the annual inventory deficit narrowing from 26 percent to 16 percent from January to December 2022. However, that deficit could widen again as some homesellers withdraw from the market as evidenced by a four-year-low of 168,000 new listings coming on the market in December.
Tucker said mortgage rates will continue to be a main driver of housing activity into 2023, with a slight decline in rates encouraging some buyers to lock in savings. Monthly mortgage costs for a homebuyer who offered a 20 percent down payment on a typically valued home ($356,819) decreased $100 month-over-month to $1,800 — making buying a better deal than renting for the typical American paying $1,981 per month in rent.
However, the dip in mortgage rates isn’t enough to make homesellers move, as they likely have mortgage rates that are well below the current 30-year fixed rate of 6.914 percent.
“Still high yet falling mortgage rates may be convincing current homeowners to hold on to their property until the spring selling season,” the report reads.
