Understanding the charts at the top of each page of the Housing Report helps us forecast the market more effectively, enabling us to make better-informed decisions. Barring extreme and unusual events that might disrupt it, local real estate markets generally follow repeating annual cycles. Patterns of monthly sales activity and price fluctuations from previous years tend to repeat, providing insight into what we can expect in the months ahead. Demand has exceeded supply since 2019—even before COVID-19. The pandemic further disrupted the market, as demand grew significantly faster than the available housing stock, particularly in the entry-level  price ranges. The best move-in-ready listings sell quickly and often at prices above the market average. Given the sustained demand for well-kept, quality homes, supply is the primary driver of sales and prices.

When both the quantity and quality of inventory rise, sales and values increase. Conversely, when the number of new listings and their quality diminishes, both sales and prices tend to decline. In recent years, the third and fourth-quarter decline in sales and prices, as shown in the chart above, has primarily resulted from a shortage of quality inventory. The drop in average price and price per square foot is not due to declining property values but rather reflects that year-end inventory tends to be more picked-over. We will continue to see high demand and quick, overasking-price sales for the best listings. However, as the flow of these listings slows in the third and fourth quarters, there will be fewer “A-list” properties to create bidding wars, and a greater proportion of sales will involve more average or below-average listings.