CNN reported this week that the national median existing home price was down 0.2% from February of last year. This brought it down to $363,000 ending an over 10-year trend of increases. In the Charlotte area, we are following that national trend. Last February the median home price was $360,250, and this February, we landed down 1.9% at $353,550. Nationally a price correction is expected, though the Charlotte area and indeed the South could still see prices climb in the coming months.
The Canopy Realtor Association reported their monthly numbers this week from the Canopy Multiple Listing Service. Declining prices are not the only story from the numbers. In addition, inventory of homes is up 70.5% year over year and homes are staying on the market longer before a sale takes place. This indicates that we are not in the frenzied market from last year any more. Homes are averaging 52 days on market cumulatively until they sell, up 116.7% from the 24 days average last year.
There are many factors at play right now from rising interest rates to bank failures and many in between. The price hikes over the last several years have priced many first-time homebuyers out of the market. Many would-be sellers regret not selling at the height of the frenzy and want to wait until prices spike again before selling. There is naturally going to be a period of adjustment for buyers to realize that there is not so much competition for homes right now so they don’t have to bring an all-cash over list price contract.
Though we are still in a sellers market, buyers are gaining some traction in negotiations. There is now a 1.2 month inventory of homes, up from 2,767 last February to 4,717 this February. This increase in inventory means buyers have more homes to choose from and there is less competition for each home. The result is that buyers now only have to bring an average of 95.3% of the list price to the closing table. Last year, buyers had to bring an average of 100.7% of the list price.
This trend could reverse itself easily as we ramp up into the typically busy spring season. Buyers are taking advantage of any fluctuations in interest rates to lock in lower priced mortgages so we could see the market picking up quickly or in fits and starts. In addition, we are not seeing sellers come back at the rate we expect yet to balance the market. New listings were down 18.3% from last year.
We will still need to see a lot more inventory of homes to get to a balanced market between buyers and sellers. A 4-6 month supply of homes is typically considered to be a balanced market. We are up to a 1.2 month supply, meaning that if no other homes were listed for sale and buyers still bought at the current rate, we would be out of homes in 1.2 months. Hopefully we will see more of a reversal of the seller’s market trend so that buyers will have more power in negotiations.
