Housing May Finally be Feeling the Normal Seasonal Slowdown
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Housing Market Recovery Index Highlights – Week Ending October 31

  • The realtor.com Housing Market Recovery Index declined to 109.4 nationwide for the week ending October 31st, a decrease of 3.0 points over last week.
  • The ‘housing demand’ component – which tracks growth in online search activity – fell for the second consecutive week to 119.8, a decrease of 3.8 points over the prior week.
  • The ‘housing supply’ component – which tracks growth of new listings – reversed last week’s gains and fell to 98.7, down 7.4 points over the prior week and 1.3 points below the January baseline.
  • Regionally, the West continues to lead the pack in the recovery, but its index decreased most, by 3.6 points compared to last week.

Download the full Housing Market Recovery Index dataset here.

National Recovery Trends

After months of unseasonably high growth, the U.S. housing market may finally be feeling the normal seasonal slowdown. The realtor.com Housing Market Recovery Index declined to 109.4 nationwide for the week ending October 31st, 9.4 points above the pre-COVID baseline but a decrease of 3.0 points over last week. Overall housing activity remains above expected levels of growth but the recovery boost may be coming to an end. 

Signs of deceleration continued to emerge as Americans turned their attention to the Elections, coronavirus and winter weather. Both measures of buyer and seller activity posted visible declines going into November. The ‘housing demand’ component – which tracks growth in online home searches – dropped again this week, suggesting homeshopping activity is starting to follow the usual fall slowdown. Similarly, the ‘new supply growth’ component – which tracks growth of new listings – dropped visibly, erasing the earlier gains and indicating that seller confidence remains highly sensitive to calendar movement and external factors. For now, new listing declines are still within the pre-pandemic normal range of variability. 

Interest in housing remains elevated, but this week showed further hints of homeshopper fatigue becoming a factor in the final two months of the year. If this continues, we may see pressures to both price growth and time on market ease further in the coming weeks. For now, the ‘listing price’ growth index remained steady while the ‘pace of sales’ index decreased this week.

Week ending 10/31 Current

Index

w/w change # of consecutive weeks above recovery
Overall Housing Recovery Index 109.4 -3.0 16
Housing Demand Growth Index 119.8 -3.8 26
Listing Price Growth Index 109.2 +0.6 22
New Supply Growth Index 98.7 -7.4 0
Pace of Sales Index 116.8 -2.1 15

The ‘housing demand’ component remained visibly above recovery, but this week’s index fell for the second consecutive week to 119.8, a decrease of 3.8 points over the prior week. Homebuyer interest has surpassed expectations post-pandemic, as detected on realtor.com over the last few months. While record-high prices, short supply and economic headwinds pose significant challenges, the lineup of buyers has not gotten significantly shorter since May. While demand saw a softening these past two weeks, it continues to remain very elevated. The coming weeks should paint a clearer picture of whether demand is softening or will remain strong through the winter  

The ‘home price’ component increased by 0.6 points last week, and is now at 109.2, 9.2 points above the January baseline. With supply at record lows and buyer competition showing continued strength, sellers have newfound leverage, enabling the fastest listing price growth recorded in more than two years. 

The ‘pace of sales’ component – which tracks differences in time-on-market – continues to remain above the pre-COVID baseline but has decreased to 116.8, 2.1 points lower than the previous week. It is 16.8 points above the January baseline, suggesting buyers and sellers are continuing to connect at a faster rate going into the fall.

The ‘housing supply’ component – which tracks growth of new listings – has reversed the previous week’s gains and fell to 98.7, down 7.4 points over the prior week and 1.3 points below the January baseline. This is the first time the housing supply component has fallen below the recovery point in five weeks. At this time, seller confidence seems uncertain, and future weeks will provide a clearer picture if sellers choose to buck the usual seasonal decline in new listings or hang on until the spring. .

Local Recovery Trends

Housing markets across all four regions saw index declines this week. The West (118.7) continues to lead the pack in the recovery, but its index decreased most, by 3.6 points compared to last week. The Northeast (108.6), Midwest (107.2), and South (103.5) also remain above recovery pace and saw declines of 1.9 to 2.8 points 

Region Avg Recovery Index

(week ending 10/31)

Weekly

Change
West 118.7 -3.6
South 103.5 -2.8
Northeast 108.6 -2.6
Midwest 107.2 -1.9

44 of 50 Largest Markets Now Above the Recovery Benchmark

Locally, a total of 44 markets have crossed the recovery benchmark as of this week, three less than the previous week.. The overall recovery index is showing greatest recovery in San Jose, Seattle, Los Angeles, Boston and Denver. Markets which are still below the baseline include Oklahoma, Buffalo, Chicago, New Orleans, Atlanta, and Nashville.

In the ‘housing demand’ component, 49 of the 50 markets are now positioned above the recovery trend, one less than the previous week, with Nashville falling below trend with an index of 99.1. The most recovered markets for home-buying interest include Sacramento, Seattle, Philadelphia, San Francisco, and Austin, with a housing demand growth index between 135 and 147.

In the ‘home price’ component, 30 of the 50 largest markets seeing growth in asking prices surpass the January baseline, one more than the previous week. In the top 10 most-recovered markets, asking prices are growing at 14 percent year-over-year, on average. The most recovered markets for home prices include New Orleans, Pittsburgh, Austin, Riverside-San Bernardino, and New York, with a home price growth index between 110 and 114.

In the ‘pace of sales’ component, 47 of the 50 largest markets are now seeing the time on market index surpass the January baseline, the same count as the previous week. In the top 10 most recovered markets for pace of sales, time-on-market is now down 24 percent, on average, year-over-year. The most recovered markets for time-on-market include Los Angeles, Louisville, Las Vegas, Boston and Virginia Beach, with a pace of sales growth index between 131and 162.

In the ‘housing supply’ component, 25 of the 50 largest markets saw the new listings index surpass the January baseline, three less than last week. Interestingly, markets where new supply is improving the fastest tend to be higher priced than those that have yet to see improvement, suggesting sellers are more active in the more expensive markets. The most recovered markets for new listings included San Jose, San Francisco, Seattle, Denver and Boston, with a new listings growth index between 132 and 188.



How to read the index – the overall index is set to 100 for the last week of January based on average year-over-year trends that month, and updated every week relative to that baseline. A value of 100 means the market has recovered to January 2020 pace. The higher the index value, the higher the level of recovery. The lower the index value, the lower the level of recovery. 


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Javier Vivas

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