Expect New Home Listings for 2023 to Be 'Depressed Again'

A key point for 2023 is that many potential sellers are locked into their current homes with low mortgage rates – and new listings are down sharply, according to Bill McBride, blogger, Calculated Risk.

This significantly impacts the move-up market since potential move-up buyers would face much larger monthly payments if they bought a different home, he writes.

The local market reports show that new listings were down 18.2% year-over-year and Realtor.com reports new listings were down 17.2% YoY.

It seems likely that mortgage rates will remain well above the pandemic lows, and therefore new listings will be depressed again in 2023.

Greenville, S.C., Led Nation in Days on Market

Redfin reported last week that the typical home was on the market for 40 days before going under contract, more than double the record low of 18 days set in May and the slowest pace since January 2021.

In fact, 28% of homes went under contract within two weeks, the lowest share since January 2020.

Home Method reported that 73% of metros in 2022 saw an increase in days on the market and Greenville, S.C., homes stayed on the market the longest at 85 days.

And for the year, the national average number of days a home was on the market was 35 days – a 67% increase from the same time in 2021.

The supply of homes for sale posted a record year-over-year increase this week as homes linger on the market, according to Redfin, which also suggested there’s an “uptick in early-stage demand.”

The total number of homes for sale rose 18% from a year earlier d

‘Slowest’ Time of the Year

During the four weeks ending Dec. 25, the percentage of homes for sale rose 18% from a year earlier, the biggest increase since at least 2015.

“We’ll know more about the direction of rates and whether the recent uptick in early-stage demand will translate into sales when we’re settled into the new year,” Redfin Deputy Chief Economist Taylor Marr said in prepared remarks.

Marr added that house watchers must realize that [the last week of 2022’s mortgage-rate pop to 6.42% on the 30-year] came between Christmas and New Year’s Day – typically the slowest of the year for pending sales.

Some buyers are dipping their toes back in the market, as they’re able to take their time searching. Redfin’s Homebuyer Demand Index–a measure of requests for tours and other Redfin buying services–is up 14% from its October low. Still, Redfin doesn’t expect sales to tick up until well into January.