Pace of Home Price Increases Slowing

by Lauren Agajanian

2015 continues to be an impressive seller’s market, but the pace of home price increases has slowed in the third quarter of 2015.  This quarter we saw a shift from home price increases in excess of 10% to a more steady pace of increases between 5-10% price appreciation in the markets surveyed.

This data comes from a survey of HouseHunt agents with exclusive territories across America. This grassroots approach to studying the housing market gives us a thorough look at where the real estate market will continue to go in 2015 and beyond.

 

Buyer & Seller Activity

Last quarter, we presented a seller’s market. There were considerably more buyers than sellers in the market, and conditions responded accordingly. This quarter, that stark contrast has shifted slightly but has carried over into the Fall. 56% of HouseHunt agents surveyed reported having more buyers than sellers, a decline of 8% from last quarter.  However, there was only an increase of 4% in seller activity with 20% of the markets showing buyer and sellers about even.

Buyers continue to disproportionately dominate the market, giving seller’s a clear edge, but clearly there is an ever so slight shift from less buyer activity and more sellers entering the market.

This quarter our survey shows that 70% of our markets are showing an increase in buyer activity versus 83% of HouseHunt agents surveyed report an increase in buyer activity in the previous quarter.  Buyer activity , however, is still increasing over the third quarter of last year where only 57% of our markets reported an increase in buyer activity.

Seller activity is continuing to grow with  60% of Agents reporting an increase in seller activity versus 57% in the previous quarter.  Overall real estate home sales continue to outpace 2015 with NAR reporting a seasonally adjusted annual rate of sales of 5.48 million homes in 2015 compared to 5.06 million sales in 2014, an increase of 8.3%

Home Inventory

A seller’s market equates to a strong economy. 90% of HouseHunt agents saw their listings sell for more this quarter than this time last year. This is about average: last quarter saw 91% report an increase, and this time last year saw 91% report an increase. What really makes the third quarter of 2015 stand out is the shift to a slower pace of home price increases. Only 20% of the Agents reported increase home prices of 10% or more compared to 32% in the 2nd Quarter.  This slowing of price point increase is in line with NAR reports showing that the median home price is up 5.5% from the 3rd quarter of 2014 with the national median home price being $229,000 at the end of the 3rd quarter 2015.

Only 4% of agents across the nation say their listings are selling for less. That’s the lowest depreciation rate since before the burst of the housing bubble!

Besides sale price, we also need to take a look at how long active listings sit on the market. As you can imagine, such competition amongst buyers has caused listings to fly off the market faster than ever. A whopping 69% of our agents say their listings sat on the market for an average of less than 60 days.

So listings are selling for more and they’re selling fast. Does this mean more contentment with people selling their homes? Not necessarily. It’s important for sellers to keep their expectations realistic. They are clearly being inundated with all this good news about the market, and they immediately think they can overprice their homes. 25% of our agent’s clients saw their listings close with less than 95% of their original asking price. Compare this to this time last year, when only 22% of sellers were walking away with less than 95% of their original price.

Foreclosures

One thing we’re hearing a lot about in the news is a major decline in foreclosures. According to a recent report by Core Logic, foreclosure inventory has declined by 24.3% and completed foreclosures declined by 17.6% compared with September 2014. This is great news, and there’s no reason to believe it might not be accurate. However, when you bring in our exclusive territories from all over the nation – not just the major cities – we saw that foreclosure rates are actually pretty consistent with where they’ve been for the last couple years.

This quarter, 84% of our agents said foreclosures made up less than 15% of their local market. While this is nothing particularly exciting, we can hope that the changes evident in major cities start to trickle out into smaller cities and suburbs, as well.

In Conclusion…

It can’t be overstated that the continued rise of the seller’s market is not just good for the housing market, but for the economy overall. To see home prices continue to rise and the market continue to grow simply wasn’t conceivable a few years ago. It is also great news for buyers that the rate of appreciation is beginning to slow.  This will give buyers a bit more time to find the right home for the right price.  2016 should be another good year for both home sellers and home buyers assuming interest rates and the economy remain stable.

HouseHunt’s Quarterly Comparison Chart For the U.S. | 3rd Quarter 2015 Results in Red

2013 2014 2015
Quarter 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd
Buyer-Seller Ratio
More Buyers 67% 57% 51% 61% 54% 39% 50% 61% 64% 56%
More Sellers 17% 26% 21% 19% 24% 37% 26% 15% 20% 24%
About Even 16% 17% 28% 20% 22% 24% 24% 24% 16% 20%
Average Days On Market
0-60 Days 65% 65% 57% 60% 63% 63% 56% 55% 70% 69%
Sold in 60 Days Plus 35% 35% 43% 40% 37% 37% 44% 45% 30% 31%
Unsold Inventory
Good Supply 24% 26% 32% 24% 28% 39% 44% 26% 26% 31%
Tight Supply 76% 74% 68% 76% 72% 61% 56% 74% 74% 69%
Annual Price Appreciation
Up 0-5% 21% 18% 29% 24% 27% 26% 26% 25% 26% 26%
Up 5-10% 24% 17% 31% 26% 29% 38% 27% 35% 33% 44%
Up 10% Plus 43% 54% 31% 42% 37% 25% 36% 27% 32% 20%
Unchanged 6% 5% 3% 3% 3% 4% 3% 6% 5% 6%
Negative Appreciation 6% 6% 6% 5% 4% 7% 8% 7% 4% 4%
Buyer Activity
Repeat / Move UP / Investors 81% 85% 78% 79% 77% 84% 76% 82% 75% 79%
First-time Buyers 19% 15% 22% 21% 23% 16% 24% 18% 25% 21%
Ask vs. Sale Price
Less Than 95% 30% 23% 30% 23% 9% 22% 28% 29% 26% 25%
More Than 95% 70% 77% 70% 77% 91% 78% 72% 71% 74% 75%
Multiple Offers?
Yes 88% 91% 87% 83% 86% 83% 76% 84% 88% 86%
No 12% 9% 13% 17% 14% 17% 24% 16% 12% 14%
Short Sales / Foreclosures
Less than 15% of the market no data 77% 80% 83% 79% 87% 85% 86% 84% 86%
More than 15% of the market no data 23% 20% 17% 21% 13% 15% 14% 16% 14%

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2015 US Housing Q3 Market Conditions Report by