The Numbers: Active Inventory was on a downward trend thanks to historically low interest rates and the COVID 19 pandemic. However, now that the Federal Reserve has begun to aggressively combat inflation, the effect has sent a shock wave to the housing market. Beginning at the end of Q1, we notice that monthly active inventory has been climbing and new listing have also fallen. This means a couple of things for future sellers or buyers within the real estate market.

First, houses for sale are staying longer in the market, meaning buyers are not jumping into a buying frenzy like they were six to nine months ago. Second, sellers are now becoming cautious about putting their house up for sale. This is mainly because of two reasons. One, sellers are potentially sitting on an extremely low mortgage and are perhaps unwilling to swap out of their low mortgage payments for a higher one.

Second, sellers know that they have likely missed the top of the market and will now have to settle for a little less than what they were expecting. Assuming the Fed does not pivot any time soon, we are expecting the market shift to continue well into next year, and we will likely see other variables such as Days to Sale and Days to Contract to increase.

This means it will take longer for buyers and sellers to come to an agreement, as buyers take advantage of the increasing recessionary pressures in the economy. Lastly, monthly supply will evidently continue to increase and the median sale price for houses will likely decline though at a more moderately slower pace.