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January 11, 2023

December 2022 Housing Market Statistics

If you, or your friends and family, have considered buying or selling a property in the last twelve months, you’re aware that 2022 was a turbulent year for the housing market. Inflation, soaring interest rates, and elevated sales prices combined to cause a slowdown nationwide. This slowing market harmed housing affordability. Affordability challenges have continued to limit national housing market activity, with pending home sales and existing-home sales falling 37.8% and 35.4% year-over-year, respectively, according to the National Association of REALTORS® (NAR). Higher mortgage rates are also impacting prospective sellers, many of whom have locked in historically low rates and have chosen to wait until market conditions improve before selling their home.

So how does this affect us? Economists predict sales will continue to slow somewhat but expect some welcome relief for prospective buyers in the form of softening housing prices in many markets over the next 12 months. Even more welcomed news is that these prices are expected to drop further in the high cost of living areas.

National inventory shortages will likely keep prices from dropping too much, as buyer demand continues to outpace supply, which remains limited at 3.3 months, according to NAR. Even if prices fall, many prospective buyers will find it difficult to afford a home in 2023, as higher rates have diminished purchasing power, adding hundreds of dollars to monthly mortgage payments.

Here in the Greater Chattanooga area, new listings decreased 20.3% to 693. Pending sales were down 20.3% to 661. Inventory levels grew 57.0% to 1,780 units.

Prices continued to gain traction. The Median Sales Price increased 5.3% to $300,000. Days on Market was up 47.6% to 31 days. Months Supply of Inventory was up 90.0% to 1.9 months.

There was another bit of interesting news this past week. According to a forecast by the financial services website Bankrate, the interest rate for a 30-year fixed-rate mortgage in the U.S. is expected to drop to 5.25% by the end of this year, which would be 1.49% points lower than the current rate, and nearly two percentage points lower than 2022′s peak rate of 7.12%.

So inventory is increasing, and prices may be starting to ease. These factors are just a few of the reasons why it is absolutely critical to utilize the expertise of a Realtor®. We are bound by our Code of Ethics to make sure that our clients’ needs are met responsibly. Realtors® work tirelessly for their clients and provide expert knowledge. That’s Who We R®.