Year in Review: 2022 Marked a Transition Toward a More Balanced Housing Market

According to the latest RE/MAX National Housing Report, the most telling housing metrics of 2022 were punctuated in December: Home sales were down 38% from a year ago, while the number of homes for sale was up 69% across the report’s 53 metro areas. While these numbers signal a less active market overall, 2022 was ultimately a fairly strong year for housing. Comparisons to 2021 – a record-breaking year – amplify the degree of decline in 2022.

These trends certainly brought many challenges to the forefront – especially for sellers who have held the advantage for nearly a decade. More homes for sale staying on the market 10 days longer than in 2021 made for renewed competition amongst listings and a dwindling chance of an overnight sale above asking price.

These conditions, met with increasing interest rates, created a deviation from an environment many real estate consumers were accustomed to in recent years.

RE/MAX leaders at both the RE/MAX, LLC and network levels agree this adjustment toward a more balanced housing market is a good thing. Here’s some reasons why:

Homebuyers Are Not Feeling (As Much) Pressure

Donna Deaton of RE/MAX Victory + Affiliates in Liberty Township, Ohio, noted that in the areas of Cincinnati and Dayton, buyers are not feeling so rushed to purchase or settle.

“The playing field is leveling out somewhat. We’re noticing less urban and more suburban for space and room to expand, and inventory is increasing. Cincinnati, Dayton and the surrounding areas are among the best Midwest locations for affordable housing. Although interest rates may have softened the market prior to 2023, buyers are not afraid to move forward. Buyers understand that purchasing a home can be their best investment and provides a sense of stability.”

Nick Bailey, RE/MAX President and CEO, has been discussing the market rebalance, advantages for buyers and sellers, and the benefits of the pursuit of homeownership in this report and in recent media interviews.

In the latest housing report he said, “As strong believers in the advantages of homeownership, we think the ongoing market rebalance is actually a good thing. It’s putting buyers and sellers on more equal footing, which is refreshing after so many years of sellers having the upper hand. Sellers still have a strong position, but buyers are gaining more power in what’s likely one of the largest financial transactions of their lives.

“With mortgage rates and home prices appearing to stabilize, and with the dramatic increase we’ve seen in the number of homes for sale, both buyers and sellers have reason to be optimistic as we head into the new year.”

Stabilization Feels Better Than Frenzy

Mark Wolfe, Broker/Owner of RE/MAX DFW Associates in Coppell, Texas, referred to 2022 as a “seesaw” with all its ups and downs – and is optimistic for what the market will bring in 2023.

“We saw the beginning of some stabilization at the end of 2022 and I am hopeful we are reaching a normal market,” he said.

For those worried about a boom or bust, a less active market with more stable prices, sales at or near asking price, and transactions closing not too fast or too slow could be reassuring signs that balance offers benefits to most everyone.

Although it seems like the rebalance is and will be a good thing, Kim Devine of RE/MAX Realty Pros in Brookfield, Wisconsin, cautioned real estate agents and sellers to be more aware of hurdles in the transaction than they experienced in the last few years.

“We are seeing trends of boxes checked and contingencies being brought back into offers. However, pricing is still high and days on market short. For our market, I would believe this spring and summer are going to be nuts again. Interest rates have cooled and buyer demand is high. Until we get more inventory to supply the demand, it’s a great time to be a seller and buyers and agents will need to put their game faces on again.”

Interested in how the housing market in the U.S. is continuing to shift? Here’s the need-to-know data from the latest RE/MAX National Housing Report:

Home Sales Continue to Decline
Sales in every month of 2022 fell short of the previous year, with the percentage of decline starting out in single digits during the first quarter before topping 30% in the fourth quarter. Of the 53 metro areas surveyed in December 2022, the overall number of home sales is down 1.4% compared to November 2022, and down 38.2% compared to December 2021. The markets with the biggest decrease in year-over-year sales percentage were Las Vegas, NV at -52.3%, Anchorage, AK at -49.5%, and Dover, DE at -48.9%. No metro area had a year-over-year sales percentage increase in December 2022.

Home Prices Are Holding Fairly Steady
After a period of over 125 consecutive months of a run up in prices in the U.S. housing market, it finally looks like prices are beginning to stabilize. The Median Sales Price of $385,000 was 1.3% higher year over year in December, compared to 13.9% higher year over year last January. The markets with the biggest year-over-year decrease in median sales price were San Francisco, CA at -5.1%, Los Angeles, CA at -4.7%, and Honolulu, HI at -4.3%. Four metro areas increased year-over-year by double-digit percentages: Manchester, NH at +17.7%, Fayetteville, AR at +12.3%, Indianapolis, IN at +11.8%, and Omaha, NE at +10.2%.

The Number of Homes for Sale is Rising
The number of homes for sale in December 2022 was down 12.2% from November 2022 and up 69.0% from December 2021. Based on the rate of home sales in December 2022, the months’ supply of inventory was flat at 2.5 compared to November 2022, and increased compared to 1.2 in December 2021. In December 2022, the markets with the lowest months’ supply of inventory were a tie between Albuquerque, NM and Trenton, NJ at 1.0, followed by a five-way tie between Baltimore, MD, Hartford, CT, Manchester, NH, Seattle, WA, and Washington, DC at 1.2.

Ready to make a move? Contact a local RE/MAX agent today.

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