U.S. Housing Market Hits Decade-Long Imbalance

The U.S. housing market is experiencing an unprecedented imbalance, with sellers outnumbering buyers significantly. According to a recent Redfin report, December 2023 recorded a staggering 47.1% or 631,535 more home sellers than buyers. This figure marks the largest discrepancy since 2013.

Record High Imbalance

The increase in sellers over buyers is notable. The gap has widened by 7.1 percentage points compared to November and 22.2 percentage points from a year earlier. High home prices are contributing to buyer reluctance. December witnessed the most substantial decline in buyers since March 2023, dropping 5.9% from the previous month.

Seller Behavior and Market Dynamics

• Home sellers are stepping back from the market, though at a slower pace with a 1.1% monthly decrease in December.
• Despite the increased supply of sellers, home prices remained resilient, with a slight rise of 0.1% from November and 2.2% compared to the previous year.
• Many sellers are reluctant to adjust their asking prices. This stubbornness is evident in markets like Dallas, where some sellers are struggling to sell homes purchased at higher prices during the pandemic.

Real estate agent Connie Durnal highlighted a case where a seller in Dallas faced a 10% loss after overpaying for a home. While some sellers acknowledge the shift towards a buyer’s market, others remain unwilling to lower their prices.

Regional Buyer’s Markets

Austin, Texas, tops the list of U.S. metros with the largest buyer’s market, showing a remarkable 128% increase in sellers compared to buyers. Following Austin are:

• Fort Lauderdale, Florida: 125% more sellers than buyers
• Nashville, Tennessee: 111% more sellers than buyers
• Miami, Florida: 103% more sellers than buyers
• San Antonio, Texas: 103% more sellers than buyers

These cities experienced rapid growth during the pandemic, which led to increased prices and construction. Consequently, many prospective buyers now find themselves priced out of these markets.

Seller’s Markets in the Northeast

In December, only five of the top 50 U.S. metros exhibited seller’s market conditions. Notably, Nassau County, New York, had the tightest seller’s market, with an estimated 33.4% fewer sellers than buyers. All but one of the remaining seller’s markets were located in the Northeast, with Milwaukee being the exception.

The current dynamics in the U.S. housing market signal significant challenges for both buyers and sellers, with prices remaining high amid shifting market conditions.