By Kerry Smith
Knock’s market index forecasts a divided nation in 2023, with sellers retaining an edge on the eastern side of the U.S. and buyers gaining leverage on the west.
NEW YORK – As the reality of high home prices and higher mortgage rates sets in, U.S. homebuyers will gain some leverage in 2023. However, shoppers are in for different experiences depending on where they want to move, according to the Knock Buyer-Seller Market Index 2023 forecast.
The Index analyzes key housing market metrics and measures whether the nation’s 100 largest markets favor homebuyers or sellers. The new index notes that the Mississippi River generally divides the country in 2023, with the top 5 buyers’ markets west of the Mississippi and the top 5 sellers’ markets concentrated along 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 in 2023,” says Knock Co-Founder and CEO Sean Black. “This will usher in a more balanced housing market. However, home shoppers will find different scenarios depending where in the U.S. they are looking.”
Based on the November 2022 Buyer-Seller Index, the latest month of available data, inventory rose in 80 of the 100 largest housing markets and all but two moved at least marginally toward favoring buyers.
For 11 months in 2022, the top buyers’ markets were all west of the Mississippi and popular relocation spots during the pandemic, which caused home prices to accelerate at a faster pace than the rest of the nation on average. Prices in the top five buyers’ markets rose by 44.6% on average between January 2020 and last month compared to 34.9% for the rest of the nation during the same period.
No Florida city made the index as a top 25 buyer’s market.
Top 5 buyers’ metros for 2023
- Phoenix-Mesa-Chandler, Ariz.
- Colorado Springs, Colo.
- Las Vegas-Henderson-Paradise, Nev.
- Dallas-Fort Worth-Arlington, Texas
- Denver-Aurora-Lakewood, Colo
Although these markets will see median home price growth moderate and even decline from pandemic peaks in 2023, prices are forecast to end the year 38% above pre-pandemic levels, 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. Denver will see inventory grow by nearly 100%, ranking second behind Charlotte, N.C., which is projected to lead the nation in inventory growth at 148.3%.
Sellers advantage in smaller, more affordable markets
Concentrated in the East Coast, the top sellers’ markets are forecast to see the strongest growth in home sales and listing prices in 2023. They tend to be smaller to mid-size markets with populations under 1 million, where home prices have remained affordable.
Despite increasing by as much as 50% since January 2020, prices in the top sellers’ markets remain well below the national median home price of $374,000.
Top 5 sellers markets for 2023
- Fayetteville, N.C.
- Harrisburg-Carlisle, Pa.
- Syracuse, N.Y.
- Hartford-East Hartford-Middletown, Conn.
- York-Hanover, Pa.
Florida metros in ‘top 25’ for a seller’s market
Markets – Sales change in Nov. 2023 – Price change by Nov. 2023
- 15. Tampa-St. Petersburg-Clearwater – sales down 5.5% – prices up 9.9%
- 20. Deltona-Daytona Beach-Ormond Beach – sales down 6.9% – prices up 3.3%
- 21. Orlando-Kissimmee-Sanford – sales down 7.6% – prices up 6.7%
- 22. Jacksonville – sales down 7.6% – prices up 1.4%
Home sales across the top sellers’ markets are forecast to rise by between 5% and 18% over the next 12 months except in Hartford, Conn., where they’re projected to dip by 1.7%. In contrast, sales are forecast to decline by 16.3% for the rest of the nation by the end of 2023.
On average, the median home price in these markets is expected to increase 8.3%, compared to the less than 1% increase forecast for the U.S. as a whole. Days on market will average 15 days, half the forecasted national median of 30 days, while average months’ supply will be just one month, compared to 3.1 months for the 100 largest markets.
Forecast for November 2023
According to the Index, the nation’s 100 largest housing markets will continue to 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 – a trend that will continue through the end 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. Fayetteville, Ark., will face the largest falloff at -22.9%.
By the middle of 2023, months’ supply will surpass three months for the first time since the summer of 2019. Charlotte, N.C., is forecast to lead the nation in months’ supply at 12.7 – double that of Port St. Lucie, Fla., which is forecast to have the second-highest months’ supply at 6.2.
© 2023 Florida Realtors®
