Multiple offers are still prevalent on bids despite slowing demand and rising mortgage rates, according to the March REALTORS® Confidence Index Survey. REALTORS® reported an average of nearly five offers on each home that sold in March, the same as in February and one year ago.
Buyers are still finding it hard to have a successful offer on the first try because of competition, especially with cash buyers who accounted for 28% of sales (23% one year ago). On average, half of buyers made two prior offers before a successful third offer. Fifty-seven percent of buyers also made a price offer above the list price, up from 48% in February.
Demand is Weakening but Still Outpacing Supply
Multi-offers on a home are still prevalent because even if buyer traffic is weakening it is still outpacing supply. REALTORS® reported that on average they took 4.1 clients on a home tour in March (4.8 one year ago), but only had on average 1.4 listings during the month (1.6 one year ago). The REALTORS® Buyer Traffic Index registered at 62 (77 one year ago) but the REALTORS® Seller Traffic Index was just at 36 (35 one year ago). An index below 50 means generally ‘weaker’ conditions than one year ago.
With homebuying demand still outpacing supply, properties typically stayed on the market for a shorter time compared to one year ago, at 17 days on market (18 days in the prior month, 18 days one year ago). Eighty-seven percent of listings were on the market for less than one month (84% in the prior month, 83% one year ago).
Inventory of Existing Homes for Sale Nearly 2 Million Short of 6 Months’ Supply
Buyer competition remains intense due to the short supply of homes on the market. As of the end of March, there were 950,000 homes on the market (active and unsold), equivalent to two months of supply at the current monthly sales pace. A desirable level is about six months based on the historical level, so home prices are appreciating at a modest pace of 5%. At six months of supply, the inventory of homes on the market should be at 2.9 million, which means a shortage of about 2 million homes for sale.
Prices are likely to continue to hold firm even as demand slows due to tight supply. NAR expects home price appreciation to moderate with demand, but prices will continue to appreciate by about 5% by year-end, not decline, due to the tight supply.