Realtor.com®’s February Housing Data: Buyers Face Affordability Constraints

the staff of the Ridgewood bnlog

Ridgewood NJ, according to Realtor.com®’s February housing data, the inventory of homes for sale continued to grow, driven by homes spending more time on the market as buyers continued to face affordability constraints. A few larger metros also saw inventory increase above pre-pandemic levels. Selling activity continued to decline, with fewer newly listed homes compared to last year, despite an uptick in seller sentiment seen in January.

The data indicates that buyers and sellers are still largely in a stand-off in the housing market. In a sign that sellers could be relenting, the gap in new listings shrank this week. On the other hand, asking price growth ticked up and time on market narrowed compared to a year ago, both signs that buyers may be more active in the market.

Still, most indicators of activity remain significantly lower than they were a year ago.  New listings continue to fall short, and compared to this same time period, inventories are up, time on market is longer, and asking price growth is also slower. Taken as a whole, this week’s data lines up with other indicators that are pointing to a potential bottom in housing market activity at a fairly low level. However, they don’t yet offer a strong indication of how long the market will bounce along the bottom.

Key Findings:

• The median listing price grew by 7.2% over last year. Growth in the typical asking price of for–sale homes ticked up slightly from last week’s pace which was the lowest since June 2020. While the mortgage rate has remained high and recently begun to climb again, some housing data have signaled a potential increase in buyer interest. In particular, pending home sales rose in January and new home sales also rose from December. An uptick in home price growth would be consistent with these trends and with the idea that price reductions, while still much higher than one year ago, improved more than would be expected from a typical January to February. Firming price trends could bring out some sellers, but as long as the Fed remains focused on taming inflation, mortgage rates are likely to remain higher, complicating the budget limbo for potential trade-up homebuyers who still require a mortgage. As of the end of January, the median price for a home sold in Bergen County was $540,000, according to Realtor.com, versus $575,000 in Morris County, $510,000 in Essex County, versus $450,000 in Passaic County, and $325,000 in Sussex County.

• New listings–a measure of sellers putting homes up for sale–were again down, this week by 16% from one year ago. For 34 weeks now, fewer homeowners put their homes on the market for sale than at this time last year. The gap has hovered in double-digit territory this year, but is slightly smaller than we saw in the last quarter of 2022. Although inventories are much less constrained than we saw one year ago, new listings offer fresh potential for buyers and are a good signal of whether or not homeowners are acting on plans to sell.

• Active inventory growth continued to climb with for–sale homes up 67% above one year ago. Inventories of for–sale homes rose again, but climbed on par with last week’s pace, which was a slightly slower yearly pace than we saw late January and early February. With new listings continuing to slip, the growing number of homes for sale reflects still-low buyer interest amid high costs rather than an influx of sellers. Even after these huge gains, February data show that nationwide there are only just more than half as many homes for sale as were available pre-pandemic (-47%), helping to explain why both buyers and sellers are feeling lukewarm on this spring homebuying and selling season.

• Homes spent 19 extra days on the market compared to this time last year. For 30 weeks, homes on the market have been for–sale longer than was typical one year ago. After rising steadily from summer 2022, the gap surged early in 2023, surpassing the 3 week mark recently. This signals how much has changed in the housing market over the last year as buyers and sellers alike adapt to higher mortgage interest rates that eat into purchasing power. Buyers have grown choosier and sellers have to wait longer for a sale.

Our February Housing Trends Report helps put these changes into context, however. Even though the median home listing was on the market for 67 days, 23 days longer than this time last year, this still trailed the pre-pandemic average for February by a nearly equal amount (20 days). In other words, using time on market as a guide, today’s housing market is halfway between its most frenetic period one year ago and what was typical before the pandemic-era frenzy. This means that the market has room to adjust in either direction, and mortgage rates will likely play a strong role in determining whether the market slows further or picks up speed.

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