Last week we hit the highest average sales price since the end of June and the second highest median sales price of the year.  Those are spring conditions, how is this possible this time of year?  

For the same reason median days on market have come down, concessions declined for 3 weeks and the percentage of properties selling at or above the asking price has slightly increased.  

Interest rates.  

35 days ago, interest rates were the lowest they had been in two years with government loans  in the high 4% range and conventional loans in the mid 5% range.  As we know rates climbed steadily since then.

The market results we see today is the outcome of low rates 35 days ago, a short window of aggressive buyer activity.  With rates up, in about two weeks all the charts will start showing concessions rising, sold prices dropping, days on market increasing, price reductions increasing and offers below asking increasing.  

But if rates drop again, we’ll see a surge of buyer activity and those trends will reverse. Rates are still expected to drop, the question is whether it will happen before year-end.  

Market Stats

Price

The average sold price ended last week at $733,483, the third highest average price of the year.  

And last week saw the second highest median sales price of the year at $610,000.  But what’s compelling about this most recent trend of climbing prices is, it’s 4 weeks straight.  

The previous price peaks year to date have been short lived.  There were one week spikes of expensive homes selling, followed by a fairly consistent decline.  This last week’s extraordinary numbers are after 4 weeks of climbing prices.  That is correlated if not causal to the decline of interest rates starting about 75 days ago! 

But again, with rates having increased, prices are likely to end the year as they always do, on a downward trend.  

Showings

Buyer activity remains elevated with 23,541 showings last week.  Compare this to just 14,000 and 13,000 showings for the same week in 2022 and 2023 respectively.  Buyers may be sensitive to interest rates, but the buyer market demand is clear.  

And yet, buyers are still taking their time. In the height of the pandemic when everyone wanted to buy a home, properties were seeing an extraordinary 25 showings before getting an offer.  The difference was, those 25 showings happened over the first weekend of the home being on the market.  

Now, homes are experiencing closer to 30 showings before getting an offer, but those showings are spread out over 60 days on average.  

And the result is the average seller experiencing 2.15 showings per week.  

Concessions

Concessions dipped for three weeks in a row to a YTD low of $5,247 per contract, only to bounce back up this last week to $6,612 per contract.  Why…rates.  

Context is important.  As a reminder, concessions averaged about $1,500 per contract for a very, very long time before our rapid 2020-2022 appreciation and then jump of interest rates in spring of 2022.  

If rates remain slightly elevated and inventory remains high, expect concessions to rise before year-end.  

Inventory

962 new homes hit the market last week and 255 properties came back on the market.  798 properties went under contract, 244 properties were withdrawn and 302 listings expired.  What does that all add up to?  

A slight decline in total inventory by about 130 properties.  We ended last week with 10,776 homes available for sale compared to about 7,500 homes the same week in the last two years and just 3,600 homes in 2021.  

Inventory will decline between now and year end, likely ending the year at about 7,500 homes.  This happens each year as buyer activity slows down and sellers decide to take their home off the market for the holidays.  Expect withdrawn listings to spike a little higher than they have in recent years.

Days on Market

A few weeks ago I said it was too early to call declining days on market a trend, but suggested that lower rates may drive this seasonal anomaly.  And low and behold, median days on market has been trending down for the last 8 weeks, ending last week at 27 days.  

Don’t expect this trend to continue as we enter winter months, higher rates, slower buyer activity and relatively high inventory.  And, average days on market is a better indicator of seller and agent sentiment in these market conditions.  While median DOM shows that about half the market is going under contract very quickly, the average days on market tells the tale for the rest of the market.  

We can see a change in acceleration of days on market when interest rates dropped to their two year low about 5 weeks ago, but average days on market continues its march upward toward the end of the year, ending last week at just under 48 days.    

Conclusions

Interest rates will remain volatile, days on market will increase toward year end, inventory will decline by about 3,000 homes, prices will start to slide again, more homes will experience a price reduction and most of the offers will continue to be below asking, before a very busy and strong real estate market next spring.