The spring season will likely draw sellers and buyers to the market, but after that, U.S. metros will probably go different directions for buyers’ and sellers’ markets.
NEW YORK – As the reality of higher home prices and mortgage rates sets in, U.S. homebuyers will likely gain some leverage in 2023. But it depends on where they live. The Knock Buyer-Seller Market Index 2023 forecast finds a clear divide between the best markets for buyers versus sellers.
The Index analyzes key housing market metrics to measure the degree to which the nation’s 100 largest markets favor homebuyers or sellers. The latest report finds that the top 5 buyers’ markets are west of the Mississippi, while the top 5 sellers’ markets are in the East Coast.
“With home prices and interest rates cutting into purchasing power, the relocation hotspots where prices grew quickly during the pandemic will increasingly favor buyers in 2023, while more mid-sized markets offering good job opportunities and affordable housing will be the top performing real estate markets,” predicts Knock Co-Founder and CEO Sean Black.
Black expects a more balanced market overall, but buyers “will find different scenarios depending where in the U.S. they’re looking.”
Based on the November 2022 Buyer-Seller Index, the latest month of available data, inventory rose in 80 of the 100 largest U.S. housing markets, and all but two moved at least marginally toward favoring buyers.
According to the report, sales fell 19% year-to-year, and median days on market increased to 22 from 13 in November 2021.
Hot pandemic markets become top buyers’ markets
Under Knock’s prediction, the 2023 top buyers’ markets are west of the Mississippi – popular pandemic relocation spots where home prices accelerated at a faster pace than the rest of the nation. In the top five buyers’ markets, prices rose by 44.6% on average between January 2020 and last month, compared to 34.9% for the rest of the nation.
In rank order, the top 5 buyers’ metros for 2023 are:
- Phoenix-Mesa-Chandler, Ariz.
- Colorado Springs, Colo
- Las Vegas-Henderson-Paradise, Nev.
- Dallas-Fort Worth-Arlington, Texas
- Denver-Aurora-Lakewood, Colo
However, they’re buyers’ markets based on post-pandemic price increases, Knock says. When compared to pre-pandemic pricing, they’ll still end 2023 38% higher – and 3% higher than the national average change. A sign of a slowing market, inventory is expected to grow significantly (54.4% on average) in the top buyers’ markets, with Charlotte, N.C., seeing for-sale inventory growing as much as 148.3%.
Sellers advantage: Smaller, more affordable markets
Concentrated in the East Coast, the top sellers’ markets tend to be smaller to mid-size metros with populations under 1 million – places where home prices are already affordable. Despite increasing as much as 50% since the pandemic began, prices in the top sellers’ markets remain well below the national median home price of $374,000.
According to the Knock forecast, they include:
- Fayetteville, N.C.
- Harrisburg-Carlisle, Pa.
- Syracuse, N.Y.
- Hartford-East Hartford-Middletown, Conn.
- York-Hanover, Pa.
Across the top sellers’ markets, home sales are forecast to rise by between 5% and 18% over the next 12 months. In contrast, sales are forecast to decline by 16.3% for the rest of the nation by the end of 2023.
Forecast: Spring momentum before buyers’ markets
According to the forecast, the nation’s 100 largest housing markets will teeter in neutral territory over the next few months, gain some momentum toward sellers in the spring, and then move firmly into buyers’ market territory by summer and through the rest of the year.
By November 2023, 36 markets are forecast to be buyers’ markets (up from 14 in November 2022), 41 markets will remain sellers’ markets (down from 46), and 23 will be neutral.
As the market continues to cool, the 100 largest markets are projected to see home sales decline by 16.3% year over year, with Fayetteville, Ark., facing the biggest falloff at -22.9%.
By mid-2023, inventory will surpass three months for the first time since the summer of 2019. Charlotte, N.C., will likely see the biggest inventory change with a projected 12.7-months’ supply. Port St. Lucie, Fla., comes in second with an expected 6.2-months’ supply.
Median days on market will continue to rise throughout 2023, reaching 30 days across the U.S. by November, with Colorado Springs, Colo., leading the nation at 121 days.