Buyers now have the upper hand, or are gaining it, in about two-thirds of the country’s large housing markets, according to Realtor.com’s quarterly Market Clock report released Oct. 19. But the same report found that the jump in mortgage rates since late August has cut a typical buyer’s purchasing power by more than $22,000 β leverage and affordability, in the words of one of its economists, “moving in opposite directions.”
The Market Clock places each metro on a 12-hour dial built from inventory, sales and contract data. Twelve o’clock is a peak seller’s market and 6 o’clock a peak buyer’s market; balanced markets loosening toward buyers sit at 2 to 4 o’clock, and those tightening back toward sellers at 8 and 9 o’clock. Realtor.com said the national reading moved to 4 o’clock β “late balanced and loosening toward buyers” β from 3 o’clock last quarter.
The count across 99 metros
Of the 99 metros in the report, Realtor.com classified:
- 27 as seller’s markets, down from 39 a year earlier
- 49 as balanced and loosening toward buyers
- 17 as buyer’s markets, up from 13 a year earlier
- 6 as balanced and tightening toward sellers
No single category holds a majority, and the picture is moving quickly: 41 metros changed positions over the past quarter. Austin, Seattle, Salt Lake City and Portland, Ore., each moved two hours toward buyers. Greenville, S.C., and Nashville were the only metros at the 6 o’clock peak-buyer position.
A Midwest-South split
The regional divide is the report’s sharpest finding. Sixteen of the 18 Midwestern metros in the report are seller’s markets, Realtor.com said, while the South holds 14 of the country’s 17 buyer’s markets.
“That is a sharp regional split, not a single national pattern,” said Jake Krimmel, senior economist at Realtor.com.
Florida dominates the buyer’s side of the dial. Seven Florida metros sit at 7 o’clock, a late buyer’s market: Cape Coral-Fort Myers, Deltona-Daytona Beach, Miami-Fort Lauderdale-West Palm Beach, North Port-Bradenton-Sarasota, Orlando, Port St. Lucie and Tampa-St. Petersburg. Columbia, S.C., and New Orleans join them there. The tilt toward buyers matches other recent data: Redfin reported last week that sellers outnumbered buyers nationally by 63% in September.
The West added three buyer’s markets by September β Bakersfield and Riverside-San Bernardino in California, and Colorado Springs, Colo. β though San Francisco and San Jose remain among the most durable seller’s markets in the country.
At the other end, 11 metros have been seller’s markets in every month of the clock’s history: Columbus, Grand Rapids, Indianapolis, Kansas City, Omaha, St. Louis and Wichita in the Midwest; Albuquerque, San Francisco and San Jose in the West; and Harrisburg, Pa., in the Northeast. Hartford, Conn., is the lone metro at 12 o’clock, peak seller. Several big Northeastern markets β New York, Boston and Bridgeport-Stamford, Conn. β sit at 9 o’clock, balanced but tightening back toward sellers.
Leverage is not the same as affordability
The report’s caution is about rates. Realtor.com said mortgage rates rose 74 basis points in just over a month, from 6.66% in late August to 7.40% on Oct. 8. For a buyer with a $2,000 monthly principal-and-interest budget, it calculated, that means 7.2% less purchasing power β more than $22,000 less house.
“More buyers can negotiate in more markets, but a bigger negotiating advantage doesn’t always mean more affordability,” Krimmel said. “As rates rise, the same monthly budget supports a lower home price. Market leverage and purchasing power are moving in opposite directions right now.”
Danielle Hale, Realtor.com’s chief economist, said the latest reading “shows buyers gaining ground nationally and in many markets,” but added that “affordability is likely to continue as a top concern for shoppers, especially as mortgage rates above 7% limit how much home a fixed budget can buy.”
New construction is under the same pressure. The National Association of Home Builders said the same day that builder confidence fell to its lowest level since 2012, with 43% of builders cutting prices in October.
Which markets could flip next
Realtor.com expects the next shifts to come from the two biggest clusters on the dial. Among balanced markets at 4 o’clock, it named Atlanta, Augusta, Ga., Charleston, S.C., Chattanooga, Tenn., Denver, Jacksonville, Fla., Memphis and San Antonio as candidates to tip into buyer’s-market territory as the slower fall and winter season approaches.
Among seller’s markets at 1 o’clock, Detroit, Richmond, Va., Columbus and Indianapolis are the closest to leaving seller’s territory. If Columbus and Indianapolis cross over, Realtor.com noted, they would end years-long runs as seller’s markets.
The readings combine inventory data, recorded transactions and sales projections based on contract activity through September. Realtor.com said it restated historical readings on that basis, so some past values may differ slightly from its first- and second-quarter reports, and it excluded Jackson, Miss., this quarter because of a county-level gap in transaction records.
