It is always good to know where we are with the real estate market, but it is essential to keep all data in a historical perspective. The monthly REALTORS® Confidence Index helps dispel many myths and cut through the noise of what is currently happening in the market.
As reported in the latest NAR Existing-Home Sales data, inventory remains in tight supply, which means homes are still moving at a fast pace despite the recent rise in rates and home prices. The median days on the market is just 14 days. In comparison, in 2011, homes took 96 days to sell.
Furthermore, 82% of homes listed sold in just one month. In 2011, less than one-quarter of homes sold in under a month.
Notably, the market has contracted as fewer buyers can afford to purchase in today’s market, but in many areas of the country, the market does remain a seller’s market. For every home that was listed, there were 2.8 offers. This is down from the frenzied market from April of this year when every home listed had 5.5 offers. Historically 2.8 offers is still a competitive housing market.
One way to understand the market’s competitiveness is to look at buyers who are waiving contingencies. While this data series is shorter, it reflects a slight ease that mirrors the number of offers for every home. Nearly one-third of buyers waived an inspection or appraisal contingency, but the last month it fell to 27% for both.
Another measure of the housing market is whether a REALTOR® had a client who had a distressed sale in the last month. Due to the consistent rise in home prices, homeowners typically have equity in their homes, and distressed sales are not common today. In 2008, 49% of REALTORS® had a client with a distressed sale; today, it’s only 1%.
Who is purchasing homes has shifted some in the last month. There is a reduction in the share of all-cash buyers (who may be waiving the home appraisal) and a reduction in vacation and investment purchases. All cash buyers now stand at 24%. The last high among all-cash buyers was seen at 35% in 2014.
Non-primary residence buyers are now at 14% from a high of 22% in January 2022.
Unfortunately, the share of first-time buyers remained suppressed at just 29% last month. While it is not the high seen during the First-time Home Buyer Tax Credit in 2010, it is also not the historical norm of 40% seen in the annual Profile of Home Buyers and Sellers report. During the time period of the First-time Home Buyer Tax Credit, there was more housing inventory than is in the U.S. housing market today.