Market Recap

– Kansas City Association of Realtors

2022 was a turbulent year for the US housing market, as inflation, soaring interest rates, and elevated sales prices combined to cause a slowdown nationwide. Affordability challenges continue to limit market activity, with pending home sales and existing-home sales down month-over-month and 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.

Closed Sales decreased 36.3 percent for existing homes and 22.2 percent for new homes. Pending Sales decreased 22.1 percent for existing homes and 45.0 percent for new homes. Inventory increased 18.7 percent for existing homes and 64.9 percent for new homes.
The Median Sales Price was dead even for existing homes but increased 15.5 percent for new homes. Days on Market increased 42.9 percent for existing homes and 46.8 percent for new homes. Supply increased 37.5 percent for existing homes and 84.8 percent for new homes.

Economists predict sales will continue to slow and housing prices will soften in many markets over the next 12 months, with larger price declines projected in more expensive areas. However, 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.