Buyers Gain Bargaining Power, But Still Cautious

As the economy slowly shows signs of improvement, there is some particularly good news for prospective homebuyers.

According to the most recent Realtor.com®, Monthly Housing Trends Report, the U.S. housing market offered homebuyers greater bargaining power in January, as mortgage rates fell to their lowest level in months, inventory rose and the growth in the typical asking price continued to slow.

The annual decline in new listings also moderated to single digits in January. New listings are an important indicator of home-selling interest, and a sustained improvement would suggest more sellers are returning to the market in the coming months—good news for buyers who have been struggling with a lack of inventory for sale.

Despite the good news for buyers, the report indicates that still-high home prices and financing costs are continuing to deter would-be homebuyers. Prospective buyers need the guidance of a professional real estate agent to help them locate homes for sale within their budget and to guide them through alternatives that can make home financing more affordable.

Realtor.com® also released its Q4 Cross-Market Demand Report, highlighting regional variations in home-buying activity sparking buyers to move to more affordable areas. According to the report, across the top 100 metros in Q4 2022, 55.5% of listing views on Realtor.com® went to properties located outside of the shoppers' metro area, compared to 55.0% during the previous quarter and 53.4% in the same time last year. Regionally, shoppers in the West (63.0%) and Northeast (57.0%) were mostly likely to search out-of-market last quarter.

Nationally, the number of active listings in January continued to climb higher, suggesting that less competition and more time to make home-buying decisions weren't enough to spur buyer demand in the face of high mortgage rates and home prices. Pending listings, or homes under contract with a buyer, continued to drop, as did the number of newly listed homes. This month's decline in new listings is the smallest since last July, and the South saw an increase in new listings, which means more, fresh for-sale options for homebuyers.

In January, the U.S. median listing price remained unchanged from December. Growth in the typical asking price (+8.1% year over year) also remained little changed from last month. As the number of homes for sale continues to rise, sellers were more than twice as likely as last year to reduce the asking price for their home. Homes also spent more time on market than last year, with homes in western metros spending 12 days more on the market compared to pre-pandemic times, but in all other regions homes are still selling more quickly than 2017–2019, on average.

As they say, however, all real estate is local. Be sure to consult a local real estate expert to explain how national trends are affecting your particular market, and how you can best fulfill your dream of homeownership as the housing market gradually returns to balance.