The real estate market has always been a rollercoaster of ups and downs, with supply and demand dictating the pace. As we wrap up the second quarter of 2023, it’s time to take a closer look at the current state of the market, particularly in terms of single-family homes and new construction. We’ll explore the latest inventory numbers, pending sales, and the overall market trend. So, hold on tight as we delve into the battle of supply and demand in the real estate market.
At the end of Q1 2023, the total inventory of single-family homes on the market stood at 1,457. As expected, this number has increased to 1,605 single-family homes in Q2 2023. This surge can be attributed to the spring/summer season, which sees more homeowners listing their properties for sale. However, when we zoom in on the new construction market, the scenario changes. The inventory for new construction single-family homes has declined from 1,018 last quarter to 895 today. This decrease indicates a potential shift in buyer preferences towards existing homes.
Total Active Listings
Taking a broader perspective, if we compare the current inventory numbers to the previous years, we can see that we are still experiencing a lower supply than what we witnessed in 2018 and 2019. This scarcity of available homes has been a persistent challenge for buyers in the market.
Months of Supply
To gauge the balance between supply and demand, we look at the months-of-supply metric. In Q2 2023, the total months of supply for the overall market is 2.4, indicating a tight market. However, when we analyze new construction specifically, the months of supply extend to 6.2 months, which is considered a balanced market. This slight increase in supply offers some relief to buyers actively searching for their dream homes.
Pending Sales
Looking at the number of pending sales, we can observe a decline compared to the previous years. Currently, there are 1,427 SF homes pending, with 436 of those being new constructions. Although these numbers are lower than the last three years, they are in line with the market trends observed in 2018 and 2019. This indicates that the market is stabilizing to a more standard type of year.
Sold Homes
In the past 12 months, a total of 8,143 SF homes have been sold — a decrease of over 2,600 homes compared to the previous year. Despite this decline, there is still a strong demand for homes in the market.
Market Outlook
As we look ahead, it’s important to note the impact of interest rates on the market. While the current situation may resemble the slower pace of 2018 and 2019, when it took several months to sell a home, there are factors that may positively influence the future. The recent Consumer Price Index (CPI) numbers, which indicate a 3% increase, can result in lower interest rates. If this trend continues, with interest rates in the low 6’s or even into the 5’s, we could see a robust spring market in 2024.
The real estate market at the end of Q2 2023 is a battleground between supply and demand. While the total inventory of single-family homes has increased, the inventory for new construction homes has declined. Despite this, the market is still experiencing a lower supply compared to previous, more standard years. The months of supply for new construction indicate a balanced market, yet for builders it feels slow paced after the last 3 years of extremely high demand and sales.
Pending sales and sold homes numbers have decreased, but the market is stabilizing to a more standard type of year. As we move forward, the impact of interest rates and the potential for a robust 2024 spring market are factors to watch. It’s an exciting and dynamic time in the real estate market, and with the help of a knowledgeable real estate specialist like Kalen Ludwig, buyers and sellers can navigate this ever-changing landscape with confidence. So, whether you’re looking to buy or sell a home, buy a lot, or build a new home — now is the time to take advantage of the opportunities available in the market.
