Spring Brings Home Buyers

HOUSTON — (By Dale King, Realty News Report) – Spring is officially here, and like the tiny sprouts popping profusely from the bleak winter soil, buyers generally appear to be heading back to the housing market, though in more subdued numbers than a year ago, says the latest Realtor.com Monthly Housing Trends Report.

The analysis offers potential home purchasers something of a mixed message. The recent six-month surge in active listings has lost momentum, it says, moderating to 59.9 percent year-over-year. But time on market shrank to 54 days from January’s high of 74 days as buyers eased cautiously into the market during March.

Still, the report says, higher mortgage rates that may be in the offing could cause would-be purchasers to back off.

“Signs show that buyers are active in the spring housing market, even if they aren’t as numerous as they were during the pandemic,” said Danielle Hale, chief economist for Realtor.com.

“Amid fewer new choices on the market and still rising home prices, home shoppers have shown that they are very rate sensitive, jumping back in only when the market rates dip,” she added. “And so, what happens with rates this spring will likely play a strong role in determining whether the housing market bumps along or picks up speed this year.”

“With so much built-up equity, home sellers are still faring well, but many are sitting on the sidelines. The usual seasonal pick-up in buyer demand appears to be underway, one of several factors that makes spring the best time to sell. And with an uncertain market ahead, it may be even more important for potential sellers to aim for this year’s seasonal sweet spot.”

But Hale warned that a “lack of new homes coming on to the market [is] a drag on home sales. The U.S. inventory of active listings continued to climb in March over last year’s lows, but the rate of growth cooled slightly from the brisk pace seen during the previous two months. With new listings remaining scarce in March, the increase in the number of homes for sale is a reflection of more time spent on the market than last year rather than an influx of new sellers.”

Figures for the 50 largest U.S. metros – which include four metropolitan regions in Texas – are varied – some up, some down. Coincidentally, Austin is the only specific Lone Star metro that shows up in the report’s results.

The typical pattern, the spring brings home buyers into the market. Here are some of the takeaways from the study:

Among the 50 largest U.S. metros, 47 markets saw active inventory increase compared to last March, with the most growth in Austin (+312.2 percent), Raleigh (+273.7 percent) and Nashville (+253.3 percent). Only three markets had inventory declines on a year-over-year basis, including Milwaukee (-17.2 percent), Hartford (-17.0 percent) and New York (-0.9 percent.).
Nine of the largest 50 markets saw their median list price decline in March. Large southern metros (+9.1 percentage points) continued to see the largest increase in the share of listings with price reductions, and the greatest year-over-year declines in the median list price were seen in Austin (-8.5 percent year-over-year), Las Vegas (-6.7 percent) and New Orleans (-5.1 percent).
Time spent on market increased this year compared to last in all 50 metros, with the largest increases in Raleigh, N.C. (+42 days), Kansas City, Mo. (+37 days) and Austin (+37 days).
The U.S. supply of active listings for sale rose 59.9 percent compared to this time last year, but it is still 49.6 percent below pre-pandemic 2017 – 2019 levels, on average. There were 211,000 more homes available to buy in March compared to one year ago.
Newly listed homes for sale continued to fall in March (-20.1 percent) compared to this time last year. This is a higher rate of decline than last month’s 15.9 percent decrease and 29.7 percent below pre-pandemic 2017 – 2019 levels. Pending listings, or homes under contract with a buyer, declined year-over-year (-24.5 percent).
Among the 50 largest U.S. metros, the biggest annual listing price gains continue to be in the Midwest, up 14.1 percent on average from last year. The metros with the biggest asking price increases were Memphis, Tenn. (+40.3 percent), Milwaukee (+26.3 percent) and Kansas City, Mo. (+17.7 percent). However, in these metros, the mix of inventory also changed, and more, larger, expensive homes are for sale today.
The number of homes for sale across the 50 largest metros was up 74.4 percent compared to a year ago. The South saw the highest growth in active listings (+127.4 percent).
Higher interest rates continue to create affordability challenges for buyers, and fewer homes went under contract compared to last year.

The national median listing price for a home was $424,000 in March, up from $415,000 in February. Annual list price growth continued to slow to 6.3 percent over last year, the lowest rate of growth since June 2020, in the early months of the COVID-19 pandemic.

In March, 12.6 percent of active listings had their price reduced, up from 5.8 percent a year ago.

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