More Quickly, Time on Market Down with Tighter Supplies
(September 5, 2012) – A new measure shows the typical amount of time it takes
to sell a home is shrinking, and for traditional sellers is now in the range of
historic norms for a balanced market, well below the cyclical peak reached in
2009, according to the National Association of
The median time a home was listed for sale on the market was 69 days in July, down 29.6 percent from 98 days in July 2011. The median reflects a wide spectrum; one-third of
homes purchased in July were on the market for less than a month, while one in
five was on the market for at least six months.
Lawrence Yun, NAR chief economist, said there is a clear relationship between inventory supply and time on market. “As inventory has tightened homes have been selling more quickly,” he said. “A notable shortening of time on market began this spring, and this
has created a general balance between home buyers and sellers in much of the
country. This equilibrium is supporting sustained price growth, and homes that
are correctly priced tend to sell quickly, while those that aren’t often
languish on the market.”
At the end July there was a 6.4-month supply of homes on the market at the current sales pace, which is 31.2 percent below a year ago when there was a 9.3-month supply.
There are consistent and related findings between annual consumer research in NAR’s
Profile of Home Buyers and Sellers, and sets of data in the existing-home
sales series, that show current market conditions are comparable with median
selling time in balanced markets.
In periods where the existing-home sales series averaged close to a 6-month supply of
homes in listed inventory, which is near the low end for market equilibrium,
the homebuyer and seller series showed a median selling time of just over six
In such balanced market conditions, home prices generally rise 1 to 2 percentage points
above the overall rate of inflation as measured by the Consumer Price Index.
“Our current forecast is for the median existing home price to rise 4.5 to 5 percent this
year and about 5 percent in 2013, which is somewhat stronger than historic
norms because of the inventory shortfall that is most pronounced in the low
price ranges,” Yun said. CPI growth is projected at 2.1 percent for 2012 and
2.3 percent next year.
From 1987 through 2011, analysis of the NAR Profile of Home Buyers and Sellers
series showed the typical time on market was 6.9 weeks, while the existing-home
sales series showed an average supply of 7.0 months, just above the high end
for a balanced market.
The new measure of days on market shows a longer selling time than the historic findings which measured traditional sellers of non-distressed homes. The new series include
short sales that typically took three months or longer to sell. “Factoring out
short sales, the median time on market for traditional sellers appears to be in
the balanced range of six to seven weeks,” Yun explained.
During the peak of the housing boom in 2004 and 2005 when inventory supplies were historically low, averaging 4.3 months over the two-year peak period, the median selling
time was 4 weeks. Prices in that time frame were bid up and rose at an annual
rate of 10.3 percent, historically higher than the 3.1 percent average growth
in CPI during the period.
In the economic downturn, time on market for non-distressed sellers peaked at 10 weeks in 2009 with a 10.0-month annualized supply. The median price fell 12.9 percent that
year, which was the biggest annual decline on record.
“Ironically, if housing construction doesn’t pick up to normal levels within two years, supply shortages could be sustained for an extended period and lead to above average
appreciation,” Yun said. “Therefore, any unnecessary hindrance to housing
starts, such as excessive local zoning regulations or stringent bank capital
rules for construction loans, should be carefully re-examined.”