While home prices remained relatively stable year over year this October, limited inventory continues to hamper homebuyers as the number of homes actively for sale shrank on an annual basis (-2.0%) for the fourth month in a row, according to the Realtor.com® October Monthly Housing Trends Report released today. However, inventory rose unseasonably (+5.1%) between September and October this year as mortgage rates exceeded 20-year highs and created additional headwinds for homebuyers. Tighter inventory means less time on the market and Phoenix leads the nation with a 14-day year-over-year drop in the number of days homes are spending on the market.

READ MORE: Here are the Top 10 suburbs in Metro Phoenix

Notably, while home prices stayed flat, the share of price reductions, while down year over year, continued to grow on a monthly basis, indicating that home prices could potentially soften in the coming months.

In Metro Phoenix, the median listing price is $530,000, a 9.2% year-over-year increase. The number of active listings has dropped 39.3% and those Metro Phoenix listings are spending an average of 37 days on the market. That is a 14-day decrease in Phoenix for days on market from this time last year.

“The current housing market continues to challenge homebuyers and sellers alike, but we do see signs of adjustment,” said Danielle Hale, Chief Economist at Realtor.com®. “While record-high mortgage rates are putting off many would-be buyers, decreases in both inventory and time homes spend on the market shows that some buyers are moving quickly to lock in rates before they can go any higher. Buyers did see some measure of relief in stable home prices this month, and we’ll be watching the rising share of listings with reduced prices to see how that impacts prices in the near future.”

What it means for homebuyers, sellers, and the housing market

Inventory down -41.8% below typical 2017 to 2019 pre-pandemic levels, still-climbing mortgage rates, and elevated home prices continue to deter potential buyers in October. To help offset scarce inventory and affordability challenges, many homebuyers are turning to affordable new construction, while those who choose to remain renters for longer are quickly absorbing more affordable new units coming onto the market.

A few relatively unusual monthly data points are worth watching, such as late-season growth in the inventory of homes for sale at a time when it would typically decline, along with the rising share of price reductions, which could signal a softness in prices in the coming months. Easing prices would be encouraging news for buyers, as much-higher mortgage rates compared to last October have increased the monthly cost of financing 80% of the typical home by roughly $166 (+7.4%) compared to one year ago, bringing it to a high not previously seen in Realtor.com® data that stretches back to mid-2016. In practical terms, this means households looking to purchase the median-priced home in October now need an additional $6,600 in annual income ($120,000) compared to the same time last year.

“Because high mortgage rates, elevated home prices, and stubbornly low inventory make today’s housing market particularly challenging, many of today’s buyers are motivated by life changes, such as growing families, supporting elderly parents or grown children, or accommodating professional needs, from return to office mandates to relocation opportunities created by remote work,” said Realtor.com®‘s Executive News Editor Clare Trapasso. “On a positive note, our data shows that home shoppers with flexibility in their location choices can still find affordable options this fall.”

Those trying to determine whether to make a move now or hold out for possible market improvement can tap into Realtor.com® RealCost tools, including the Affordability Calculator. 

Phoenix days on market see big drop

The amount of time homes spend on the market is rising more slowly than usual during the fall season, as limited supply spurs homebuyers to act quickly and newly listed homes make up a greater share of low remaining inventory. Overall, homes in all regions spent less time on the market in October than during the same time last year.

  • The typical home spent 50 days on the market this October, which is one day shorter than the same time last year and more than two weeks (-15 days) less than in the average October from 2017 to 2019.
  • In the 50 largest metropolitan areas in the United States, the typical home spent 42 days on the market, which is two days less than in October 2022. Homes in large metros in the West spent four fewer days on the market year over year, three fewer days in the Northeast, one day less in the Midwest, and homes spent the same amount of time on the market compared to last year in the South.
  • In 35 of the 50 largest metro areas this October, homes are spending less time on the market compared to last year, with time on the market decreasing the most in Phoenix (-14 days), Buffalo, N.Y. (-13 days) and Las Vegas (-11 days).
  • Time on market increased in 16 of the 50 largest metros, including New Orleans (+9 days), and Nashville, Tenn. (+6 days). Among all large metros, only Los Angeles (+2 days) and Denver (+1 day) saw an increase in time on market compared to average 2017 to 2019 pacing.

Inventory drops annually, but surprises with late-season growth

The number of homes for sale dropped year over year in October for the fourth straight month. However, October saw an unseasonal bump in inventory compared with September. Despite this small increase, active inventory still remained well below typical 2017 to 2019 levels and is down year over year across the majority of the largest metros, although a few Southern metros saw significant gains. New listings are also down as home sellers were less active in October, although the gap compared to last year is narrowing. Pending listings, an early indicator of where home sales are headed, are also down year over year.

  • Nationally, -2.0% fewer homes were actively for sale on a typical day in October compared to the same time in 2022. The number of homes for sale rose unseasonably (+5.1%) from September to October, although active inventory remained -41.8% below typical 2017 to 2019 levels.
  • Pending listings, the number of homes under contract but not yet sold, declined -7.6% compared to the same time last year. Pending homes are an early indicator of the direction of home sales, which cooled to a lower annual pace of 3.96 million in September.
  • While newly listed homes were down -3.2% compared with October 2022, they improved from a year-over-year decline of -9.1% in September.
  • Regionally, only the South saw inventory growth (+3.3%) compared to October 2022. Inventory declined -4.8% in the Midwest, -10.4% in the Northeast, and -24.7% in the West. While the number of homes for sale dropped in 33 out of 50 of the largest metros compared to October 2022 (-6.7% in this group overall), some Southern metros still saw significant growth, including Memphis, Tenn. (+30.3%), New Orleans (+26.0%), and San Antonio (+20.6%). However, only Austin, Texas (+10.4%) and San Antonio (+9.1%) saw higher levels of inventory in October compared to typical 2017 to 2019 levels.
  • Newly listed homes in the 50 largest metro areas also declined regionally, down -10.2% in the West, -6.2% in the Midwest, -3.6% in the South, and -2.3% in the Northeast. Eleven metros saw an increase in new listings year over year, up from just two in September, including Buffalo, N.Y. (+13.7%), Miami (+11.3%), and Birmingham, Ala. (+5.3%). Declines were greatest in Las Vegas (-24.9%), Virginia Beach, Va. (-16.3%), and Portland, Ore.16.2%).

Listing prices stable but price cuts climbed unseasonally

Listing prices continue to be buoyed by scarce inventory, and while new home sales increased in September, construction activity isn’t enough to fully bridge the low inventory gap. While home listing prices remained relatively stable year over year, higher mortgage rates have significantly increased the monthly costs of homeownership. Interestingly, the share of price reductions is still increasing well into the fall season, which is unusual for a typical year but follows the trend seen last year and in 2018 when the housing market slowed.

  • The national median list price declined seasonally in October, to $425,000 from $430,000 in September.
  • In the largest metros, the combined annual median list price growth rate for active listings was +5.5%, outpacing the national growth rate. While all regions saw listing prices in larger metros still increasing on average, Northeastern metros had the highest average growth rate in active listing prices (+9.3% year over year). Prices in Los Angeles (+23.3%), Richmond, Va. (+14.5%), and Providence, RI (+13.7%), saw the biggest increases. However, in each of these metros, larger and more expensive homes were listed for sale in October compared to the previous year. On a price-per-square-foot basis, listing prices only grew by +11.0% in Los Angeles, +6.1% in Richmond, and +3.4% in Providence, RI. Larger Southern metros saw the lowest listing price growth rate among the regions (+3.1%).
  • Only five out of the largest 50 metros saw declines in median list prices: San Antonio, Texas (-2.2%), San Jose, Calif. (-1.3%), Memphis, Tenn. (-0.5%), Dallas (-0.2%), and Miami (-0.1%).
  • While the share of price reductions continues to climb month-over-month, the percentage of homes with price reductions decreased on an annual basis from 21.5% in October of 2022 to 18.9% this October. Price reductions remained below last year’s levels in all four regions and were well below in the West (-10.6 percentage points).
  • However, 13 of the 50 large metros saw the share of price reductions increase compared to last October, predominantly in the South and Midwest. St. Louis saw the greatest increase (+4.2 percentage points), followed by Oklahoma City (+3.4 percentage points), and Memphis (+3.0 percentage points).