After each quarter, I look at the numbers from my regional MLS for a clearer understanding of what we’ll see in residential real estate in the short term. What trends are emerging? What could happen to prices? Where might people buy? Well, this was a really interesting quarter. Interest rates reached record lows in October, and the inventory of available houses shrank significantly. Which paints an interesting picture.
The four key indicators below help determine what we might expect. The first one — active listings — tells us about the supply side of the equation. The next two — absorption rate and number of homes sold — give us a good indication of demand. Finally, the median sale price serves as a running indicator that helps buyers and sellers with the timing of their transactions.
5,846
ACTIVE LISTINGS: Really low
55.83%
ABSORPTION RATE: Inventory is moving quickly
3,264
HOMES SOLD: This number has skyrocketed
$238,000
MEDIAN SALE PRICE: On the rise
Source: North Carolina Regional MLS
Active listings
The number of active listings dropped almost 38 percent from this time last year. It dropped 15 percent in the last quarter alone. This means fewer homes are available for buyers to consider, which leads to competition among buyers and can lead to higher final sale prices.
Absorption rate
The absorption rate shows us how quickly homes are sold in a specific amount of time. It tells us how long the current inventory of homes could last if no more homes came on the market. This time last year, we had well over a 4-month supply of homes listed for sale. At the end of September, there was only around a 2.5-month supply — a whopping drop. The current absorption rate shows a serious shortage of homes for the number of buyers in the market. A rule of thumb is that any number above 15% indicates a seller’s market. As you can see, we’re well above that.
Months of supply, Sept 2019 vs. Sept 2020. Source: NCR MLS
Active listings, Sept 2019 vs. Sept 2020. Source: NCR MLS
Number of homes sold
For a glimpse at the demand side of things, we look at the number of homes sold. Along the Crystal Coast, they’ve skyrocketed. The North Carolina Regional MLS (NCR MLS), which covers Eastern North Carolina, including the Crystal Coast, shows an increase in the number of homes sold over this time last year of 45.13 percent. That’s more than twice the national increase of 20.9 percent*. The market usually slows down in the fall, but the numbers we’re seeing at the end of the third quarter show a healthy demand and harbinger things not slowing down at all.
Median sale price
So, how are all of these numbers affecting home prices? The NCR MLS median sale price increased 16.38 percent over this time last year (nationally, it’s just under 15 percent). This isn’t surprising given the low supply of homes and the high number of homes sold. Add record-low interest rates to fuel the fire, and we’re looking at the most competitive housing market in recent history.
We take a look at this market frenzy in our new report, “Why Your Coastal Home Could Be Worth More Than You Think.” The report helps sellers and buyers make better decisions around timing and offers-to-purchase in a housing market that’s much more active than normal.
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