Homebuyers, Sellers Look to Rediscover a 'Normal' Market

US homebuyers and sellers will no doubt spend 2023 trying to rediscover what is “normal.”

Danielle Hale, Chief Economist for Realtor.com, said in her firm’s monthly housing trends report that December was a time for adjustment, setting the stage for this year.

Despite significant cooling in sales in 2022, some indicators remain in high gear, she said.

“In December, we saw both buyers and sellers pulling back as they continue to adjust to a challenging market,” Hale said in prepared remarks.

“Buyers began 2022 facing high home prices and limited inventories and ended the year with interest rates roughly double where they started.”

December Featured Buyer Hesitation

Active listings increased significantly in December over the previous year, signaling continued hesitation from buyers in the face of mortgage affordability and other obstacles.

Nationally, the active inventory of homes for sale grew 54.7% year-over-year in December, according to Realtor.com. Nonetheless, it remains well below pre-pandemic levels (-38.2% compared to the December 2017-2019 average).

The most growth in active listings could be found in the West (+110.2%), which nearly reached pre-pandemic 2019 levels (-3.9%).

Among the 50 largest U.S. metros, 49 markets posted yearly active inventory gains in December, led by Raleigh (+226.2%), Nashville (+226%), and Austin (+186.6%). Only Hartford, Conn. (-7.7%) saw a year-over-year decline in the number of for-sale homes, Realtor.com reported.

Price Moderation Could Lure Buyers

December U.S. median listing price rose by just 8.4% year over year to $400,000.

The first single-digit home sales growth figure since December 2021 indicates that “moderation in home price growth may encourage more buyers to return to the market in the months ahead and may also be welcome news for sellers aiming to sell and buy at the same time,” according to the report.