Why It’s Still a Sellers’ Market
As there’s more and more talk about the real estate market cooling off from the peak frenzy it saw during the pandemic, you may be questioning what that means for your plans to sell your house. If you’re thinking of making a move, you should know this market is still anything but typical.
Even though the supply of homes for sale has been growing this year, there’s still a shortage. And that means conditions continue to favor sellers today. That’s because the inventory level of homes for sale can help determine if buyers or sellers are in the driver’s seat. Realtors call it the “Absorption Rate.”
To calculate the absorption rate for your area, you only need to know two things: First, how many active listings are in your market today? Second, how many sales were there in the past, typically 12 months? Looking in the Northern New England Real Estate Network (NEREN), which operates our Multiple Listing Service for the NH Seacoast, I see there are currently 53 active listings of single-family homes and condos for sale in Portsmouth. To get a more accurate sold number, I took the past 3 months’ closed sales, 57, and divided them by 3 to get a monthly average of 19 sales per month.
Dividing that number in the 53 listings currently for sale gives us a 2.8 absorption rate which means at that rate, it would take 2.8 months to sell all the homes currently for sale if no new listings came on the market.
We call a 6 months supply of homes a balanced market; a number over 6 indicates a buyer’s market and under 6 shows it’s a seller’s market. So 2.8 is still firmly in the seller’s market category, but I believe the market is shifting and will continue to shift with changing market conditions.
The graphic below highlights how absorption rates react to supply and demand.
What Does This Mean for You?
Ed Pinto, Director of the American Enterprise Institute’s Housing Center, gives a perfect summary of what’s happening in today’s market, saying:
“Overall, the best summary is that we’ll move from a gangbuster sellers’ market to a modest sellers’ market.”
Conditions are still in your favor even though the market is cooling. While buyer demand is softening due to higher mortgage rates, homes priced right are still selling fast. That also underscores the critical reason to work with an experienced local Realtor who understands the shifting market and can advise you on the best strategy to sell your home quickly for the highest price.
Today’s housing market still favors sellers. If you’re ready to sell your house, let’s connect so you can start making your moves.