Are we finally starting to see more listings? Yes and no. Today I want to talk about a change we’re seeing with listings both nationally and locally. This is a really important topic, and some of it feels a bit technical because it’s about understanding new listings vs active listings. Anyway, let’s be on the cutting edge of the market by talking about stuff like this. Any thoughts?
UPCOMING (PUBLIC) SPEAKING GIGS:
10/27/23 AI Fall Conference (San Francisco) (register here)
11/30/23 Safe CU “Preparing for a Successful New Year”
It’s been a wild ride to watch mortgage rates basically do the opposite of what so many predicted this year.
TOO LONG DIDN’T READ:
1) No big change with new listings. Sellers are still sitting.
2) There’s been an increase in active listings due to fewer sales happening.
3) 8% rates can create more actives.
1) NEW LISTINGS HAVEN’T BEEN RISING:
Sometimes the narrative is we’re seeing an increase in active listings because there are more sellers, but that’s not what stats are showing.
NATIONAL NEW LISTINGS SHOW SEASONAL DECLINE:
Lance Lambert of Fortune Magazine put out this image a few days ago based on Realtor.com data, and new listings look like they’re following a pretty typical seasonal pattern across the country (see black line).
LOCAL NEW LISTINGS HAVE A SIMILAR VIBE:
Here’s a similar graph for Sacramento to show new listings in 2023 (orange) are showing a downtrend for the fall. In other words, there hasn’t been any notable change with more sellers coming to the market.
FEWER IN SEPTEMBER IS NORMAL:
Here’s a new visual to show what tends to happen with new listings between August and September. There’s only been one year since 2007 when new listings increased, so being down 11% this year is pretty normal.
2) ACTIVE LISTINGS ARE RISING:
Okay, let’s talk about where we are seeing change. There has been an uptick in the number of active listings both nationally and locally. The x-factor looks to be higher rates causing fewer buyers getting into contract.
NATIONAL ACTIVES SHOW A SLIGHT INCREASE:
Stats from Realtor.com show a slight uptick between August and September. This isn’t a massive change, but it’s something to watch. Altos Research has also been reporting an uptick lately, so we have two credible national sources reporting an increase. We need time to see the trend, so let’s keep watching over the next few months.
LOCAL ACTIVES HAVE ALSO INCREASED:
In Sacramento there’s also been a slight uptick in active listings over the past month (orange line). It’s nothing major, but it is noticeable when pulling comps and running stats. When I log into MLS, I’m tending to see 100+ more actives on any given day. This hasn’t been a dramatic change, but if rates persist to rise, we’ll likely see a bigger increase.
5.8% MORE ACTIVES IN SEPTEMBER:
It’s actually not common to see an uptick of active listings between August and September. At least, it hasn’t happened for a decade. When looking at the past sixteen years, there was an increase in active listings only 25% of the time between August and September. With that said, whenever we see a small change, we want to watch closely to see where it goes. No matter what, let’s keep our market antennas up.
BRO, DON’T HYPE THIS SMALL CHANGE:
It’s easy to blow this up and say, “Actives increased by 6% last month. The crash is happening. We’re all going to die.” But this is only 141 extra actives. Let’s remember when we’re dealing with a small number, it’s easy for a modest change to sound huge when talking about a percentage. And remember, it’s quick to spin a narrative, but it takes time to see a trend.
A NOTHING BURGER OR A TREND?
Look, this change has been slight, so we need to be really careful about giving it too much hype. But if rates keep increasing, I wouldn’t be surprised at all to see more actives. What happens with mortgage rates for the rest of the year will be the x-factor in propelling or cooling this trend. Bottom line.
BLAME BUYERS INSTEAD OF SELLERS:
Some people are going to see more listings and conclude sellers are rushing the market, but it’s actually buyers causing the issue (a lack of buyers, that is). Remember, we could have a low number of new listings, but if we see fewer pendings, it means the pile of actives can grow without sellers actually listing more homes. It’s basically an increase in supply due to waning demand. In other words, when pendings don’t happen, that helps the pile of active listings grow higher. And that’s exactly what we’ve seen lately. It’s not a huge change, but it is a change.
LIFE-CHANGING NEW VISUALS:
Okay, maybe these aren’t life-altering, but it’s fascinating to see how the gap between sales and new listings has changed. In 2008, between January and September there were just over 40,000 new listings to date, and today it’s been closer to 17,000. Is it 2007 again? Well, volume feels very similar, but we haven’t seen an explosion of listings today.
Remember, not everything that lists ends up selling. Do you see how this year doesn’t have as much space between the number of sales and new listings? Having fewer new listings has made the market more competitive.
ADVICE FOR SELLERS:
Sellers, my biggest message right now is to respect the pendings. Rates are flirting with 8%, and this makes it more difficult for buyers to afford a home today. Demand is still here, but higher rates will reduce the buyer pool even more. It’s easy to get stuck on sales from the past, but what are buyers willing to pay right now? We see that in current pending contracts. We also see what buyers aren’t willing to pay with overpriced listings (don’t price to those).
LET’S KEEP WATCHING:
Let’s watching by the week and comparing notes. Please keep sharing what you’re seeing in the trenches too.
Thanks for being here. I hope this was helpful.
Questions: What are you seeing happen with active listings? Are they taking longer to sell? What is open house traffic like? I’d love to hear.