The U.S. housing market moved further in the direction of buyers last month as the markets that cooled the fastest in response to quickly rising interest rates and home prices continued to moderate, according to the Knock Buyer-Seller Market Index released today. At the same time, many of today's seller strongholds show no sign of slowing down and some are expected to gain momentum over the next year.

 The Index, which analyzes key housing market metrics to measure the degree to which the nation's 100 largest markets favor home buyers or sellers, showed that the U.S. housing market entered neutral territory last month – the first time since July 2020 that neither buyers or sellers had the upper hand. All but one market – Fayetteville, N.C., –  has moved at least marginally toward favoring buyers over the last 12 months, a trend that will continue over the next year. In October, 51 markets were sellers' markets, 39 were neutral and 10 favored buyers.

The shift toward buyers' markets is being driven by a number of key housing market metrics, most notably declining home sales. Just 127,000 homes were sold in the 100 largest housing markets in October, down 51.4% from 262,000 a year earlier and a record low of any month since November 2016, the beginning of Knock's Buyer-Seller Market Index. The median home price was $388,000, compared to $360,000 a year ago, while average days on market increased to 19, up a full week from October 2021. 

The average sale-to-list ratio, which measures how close homes are selling to their asking price, was 99% in October, unchanged from September and down from 101% a year ago.

"The housing market has borne the brunt of the Fed's attempt to control inflation. At the same time, it has continued to demonstrate its resiliency. Despite moving into neutral territory, sellers still hold the advantage in a majority of the nation's largest metros, and many will continue to favor sellers well into 2023," said Knock Co-Founder and CEO Sean Black. "With interest rates stabilizing in recent weeks and less competition, buyers may begin to re-enter the market over the next few months, which could result in a return to a more normal spring home-buying market."

The largest movements driving the U.S. housing market's shift to buyer-favorability are occurring in neutral and more buyer-friendly markets. Strong sellers' markets, by contrast, are cooling at a slower pace, remaining firmly in seller territory, or even heating up again in terms of some key housing metrics.

In October, six of the top 10 sellers' markets were in the South, three were in the Northeast, and one was in the Pacific Northwest. Although home prices in these markets continue to rise more than the national median sale price, three of the markets – Seattle, Greensboro, N.C. and Portland, Maine – have seen prices fall 10% or more from their peaks earlier this year.

In each of the top sellers' markets, the number of homes for sale is limited, which is either driving sale prices up or resulting in a quick list-to-sale time frame. Homes in Rochester, N.Y., sold for 7% above asking – the highest of any large housing market – in October. Sellers in Hartford, Conn., and Portland, Maine, commanded premiums for their homes of 102% and 101%, respectively. Sellers in these markets sell their homes more quickly than in most other large markets; homes in 13 sellers' markets spent less than 10 days on the market. In Portland, Maine, a home spent an average of seven days on the market, while in Greensboro, Winston-Salem and Fayetteville, N.C., it was eight days.