Homeowners locked into sub-3% mortgage rates have had little incentive to offload their properties, with the average 30-year fixed mortgage rate now above 6%.
This interest rate spread is creating problems for prospective buyers as inventory has declined across 50 of the 100 largest markets, according to Forbes.
The Knock Buyer-Seller Market Index tracks housing market metrics to gauge which of the country’s 100 biggest markets lean toward buyers or sellers.
In December 2022, just 13 of the markets tracked favored buyers, 43 were neutral, and 44 markets favored sellers.
In December 2021, homes sold lower than the asking price in six of the 100 largest markets. Those cities were Buffalo, Hartford, New Haven, Rochester, Springfield, and Syracuse.
“We expect 2023 to bring more balance to the housing market, which is certainly good news for buyers following three years of intense competition,” said Sean Black, Knock co-founder and CEO.
“At the same time, with inventory down nearly 42% from the start of the pandemic and no real incentive for sellers to move, finding a home you both like and can afford will remain a challenge. Those buyers with flexibility on where and when to move have an opportunity to find more homes for sale in some of the nation’s largest and most desirable housing markets beginning in the fall.”
Although housing inventory is expected to increase by 17% in the U.S., the number of homes for sale is likely to fall in half of the 100 biggest markets, according to Forbes.
The markets expected to grow their inventory the most in 2023 are (in order) Salt Lake City, Dallas, Denver, Charlotte, Memphis, Las Vegas, Charleston, Colorado Springs, St. Louis, and New Orleans, according to the index.
Inventory in these markets hit an all-time low during the pandemic, with Dallas seeing a 34.3% decline between December 2019 and December 2022.
While the inventory is expected to pick up in these cities, it will not necessarily translate to lower prices. Six are projected to see prices rise with the median home price, according to Forbes.
Dallas remains one of the three inventory-growing markets that favor buyers, and just one will favor buyers by the second half of 2023.
