Home purchase demand is slowly rebounding after reaching new lows in November, but a lack of new listings could stabilize high home prices and lead to increased competition during the spring buying season, Zillow reports. The share of homes newly listed for sale during the second half of 2022 fell 20% from the year prior, widening a preexisting supply deficit that could continue to give sellers negotiating power even in a market correction.
While a current slowdown in buyer demand can be partially attributed to seasonality, Zillow tracked a 30% decline in the number of active house hunters from July to October 2022 before the winter season had even begun.
While inventory is as low to start the year as 2021, and buyer demand (proxied by newly pending sales) is digging out from its November lows, we are still a far cry from the explosive conditions of early 2021 and 2022, when buyer demand was cresting at new heights, fueled by near-record-low mortgage rates, triggering bidding wars on most listings. Rather, this might be the market’s first steps toward a “new normal”– a world where inventory remains rather scarce by pre-pandemic standards, but buyers are not exactly swarming the doorway of every open house like in 2021 and early 2022.
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