Fourth quarter of 2023 started slow with pending sales down 30.6% from last October, according to the latest data from Phoenix REALTORS. Year-to-date, closed sales are down 17% from the same period the previous year. The numbers follow seasonal trends typical for this time of year, as real estate activity decreases approaching holiday months.
“The Phoenix metropolitan area is weathering the challenges more resiliently than the nation at large,” remarked Butch Leiber, President of Phoenix REALTORS and an active broker. “Nationally, sales have experienced a dip of 15.4% compared to the previous year, whereas the Valley has encountered a more moderate decline of just 5.3%.
The median sales price continues to rise, up about one percent to $468,000 in October, an increase from $465,000 in 2022 and $440,000 in 2021. The housing affordability index reflected the tight inventory and rising interest rates and dropped to 59 from 62 last year, down 4.8%. In Phoenix, the median price is rising at an annual 0.6% rate compared to the national average of 2.8%.
The typical home was on the market for 55 days until sale, the same as October 2022. That timeline was up from 30 days in 2021, but a big drop from the 81 days on the market in February this year.
The limited inventory means that the percentage of the list price received continues to rise. It stood at 98.5% in October this year compared to 97.5% in 2022, but slightly less than the 100.8% mark from 2021.
New listings dropped to 6,177 in October compared to 6,517 a year ago. The numbers are well below the median of the last ten years but not as bleak as the fourth quarter of 2022. Pending sales are down significantly, hitting their lowest point since October 2007, 2,789 deals. Last October stood at 4,020, and the same month in 2021, there were 7,459 pending sales.
“Activity is slowing into the holiday season. Normally, this means fewer buyers and listings coming to market,” said Leiber. “The combination of a tight inventory and rising interest rates make sellers reluctant to list because of the cost of a new home after selling theirs and harder for buyers to find one.”
Available home inventory declined by 25.7% compared to 2022. While stock, 13,899, is the highest of any month this year, it’s significantly less than the 18,703 available a year ago.
The 9.4% drop in inventory is reflected by the month’s supply in the Valley, dropping to 2.9 months in 2023 from 3.2 months in October 2022 and far above the 1.1 months in 2021.
“Despite the tight market, the last two months of the year provide great opportunities for buyers,” said Leiber. “New home builders are offering fantastic incentives and many sellers who need to sell are offering help to buyers through efforts like buying down interest rates to help with affordability.”
