Every month, our Northern Nevada real estate update changes with market fluctuations, which is why it's time for another. In October 2022, home prices in Reno and Sparks rose slightly while seasonality and higher mortgage rates contributed to a reduction in demand and the number of home sales.
After reading this, you may be asking questions like, "When will housing prices drop?" Or "Is now a good time to buy or sell?" You may also be wondering how a recession may affect the housing market.
Though we don't have all the answers or a crystal ball to predict the future, we're sharing expert insight into the economy at large and how it affects our local market. Many believe the economy remains on shifting sands and others believe the term 'housing recession' isn't accurate for what's happening.
When talking about current market conditions, Matthew Gardner, Chief Economist for Windermere Real Estate, explained it like this:
“We are in a housing reversion, NOT a housing recession.”
Of course, this looks different from market to market. Keep reading to learn more about what happened in October 2022 and if this applies to the Northern Nevada housing market.
U.S. Home Sales Down, Demand Down, Inventory Up. What Does It All Mean?
Before diving into our local Northern Nevada real estate update, it's critical to understand some of the current U.S. housing market trends. Here are three key points you should know:
Inventory Levels Are Rising, But Oversupply Is Unlikely
Inventory levels have indeed risen significantly since the beginning of the year, which is an excellent indicator that the housing market is recovering from the pandemic-driven housing shortage. This graph from Windermere Real Estate shows an increase of 35.6%, from 900,000 units in February 2022 to more than 1.2 million in July 2022.
To some, this percentage may be alarming. However, looking at the bigger picture from the last five years, you can see that active listings remain below the national long-term average. For example, inventory levels reached nearly 2 million in 2018 and 2019.
Existing Homes Sales, Though Lower, Are Normal
Another important factor to consider is U.S. existing home sales, which declined 1.5% in September 2022 to a seasonally adjusted annual rate of 4.71 million. Still, year-to-date (YTD) home sales for the country remain higher than in 2018, 2019, and 2020. This further indicates that home sales are simply reverting to healthier levels.
Americans Have More Equity In Their Homes
If you read our last Northern Nevada quarterly real estate update, you know that homeowners also have more financial strength today than they have had since 1983. This is due to the last two years of a red-hot housing market that pushed up the value of their properties. In Q2 2022, 44.9% of all U.S. homes were considered "equity-rich." Despite a slowdown in housing prices, Nevada has more equity-rich households than most other states.
Speaking of homeownership in Nevada, let's jump into our local real estate update for October 2022 to take a closer look at what's happening in the market.
Northern Nevada Real Estate Update: Seasonality Enters The Reno-Sparks Market
Housing Prices Rose In October 2022
Our Northern Nevada real estate update shows the median price for a home reached $540,000 in October 2022, a 1.8% increase from the previous month and a 0% change from the previous year. Though housing prices have started to cool, this slight increase month-over-month indicates that many sellers can still receive the price they want for their homes. It also shows stabilization in the market, which can benefit buyers and sellers alike.
Mortgage Rates And Seasonality Drove Home Sales Down
In October 2022, 372 homes were sold, a 21.7% decrease from the previous month and a 34.7% decrease from the same time last year. If you're used to the record-high numbers we saw over the last two years, this number may seem low. But this graph shows that home sales have essentially returned to levels before the pandemic. It's also important to remember that home sales typically decline during the fall and winter months.
Homes Went Into Contract Faster
Another excellent indicator that home sales are stabilizing is the number of days it takes for a home to go into contract. In October 2022, it took 36 days for a home to go into contract, a 1.4% decrease month-over-month and a 323.5% increase year-over-year. This monthly number represents the average days it typically takes to sell a home in Northern Nevada, which is between 30 and 60 days.
Active Inventory Levels Declined
Since the Reno-Sparks housing market is constantly changing with an influx of listings, we use active inventory as a more dynamic metric to provide buyers with a better picture of available homes for sale in a given month.
In October 2022, 1,265 homes were available for sale, down 9.5% from September 2022 but up 104% from October 2021. This monthly decrease is an excellent indicator that there's not an oversupply of inventory, despite the national trend mentioned above. Instead, the Northern Nevada real estate market is balancing out, giving buyers more room to negotiate.
Fewer New Listings Entered The Market
To get an even deeper understanding of supply, we also look at the number of new listings that come into the market every month. Remember that properties can remain in this status for up to 21 days before they are available for showings. In October 2022, there were 420 new listings, an 22.9% decrease month-over-month and a 32% decrease from the previous year.
Demand Consistent With Time Of Year
If you're trying to gauge demand in the real estate market, one of the best indicators is the number of homes going into contract every month. In October 2022, 359 homes went into contract in Reno and Sparks, representing a 2.4% decrease from the previous month and a 39.6% decrease year-over-year.
Similar to what we saw with the number of homes sold, this number represents how rising mortgage rates have impacted buyer purchasing power and how seasonality has caused the market to slow. However, healthy demand for homes in Northern Nevada remains—these numbers are consistent with years before the pandemic started.
Asking Prices Continued To Stabilize
In October 2022, the average sale price for a home was 98% of the asking price, a slight decrease month-over-month and a 2.2% decrease year-over-year. Though this number is a far drop from the beginning of 2022 and the high point of the pandemic, it is typical for the Northern Nevada market, where homes sell for an average of 98.5% of the asking price.
Northern Nevada Real Estate Update Advice You Need
Buyers: Buying a house can be challenging in today's market, especially if you're doing it for the first time. The good news is that our Northern Nevada real estate update showed that housing prices and inventory levels are stabilizing. Still, before looking at homes to buy, you should figure out how much you can afford. Trying to time the market or predict what will happen next year is not the best homebuying strategy. If you find a home you love and can afford the monthly payment, it likely makes sense to buy. Contact one of our neighborhood experts to help explore your options. Sellers: Given seasonality and higher mortgage rates, you may feel pressure to take the wait-and-see approach or reduce your sales price. However, before doing anything, one of the first steps you should take when getting your house ready to sell right now is to contact an experienced REALTOR who knows the market. Though the market may not be tipped in your favor, one of our agents can help you price your home competitively while answering questions and offers from prospective buyers.At Dickson Realty, we proudly share our monthly Northern Nevada real estate update with clients and community members to stay informed. For more information about the Reno-Sparks market, contact one of our neighborhood experts today.
